Satellite Radio: There Can Be Only One

XM and Sirius are merging. Is anyone surprised? I didn’t think so. I’ve been discussing it with some friends here and here. I think they were just competing for too small a piece of real estate, and because of the way they competed and dealt with exclusive content, they were cannibalizing one anothers’ customer bases.

I can’t stand terrestrial radio. For about two years I had a 20-minute commute, during which 15 minutes was filled with commercials (regardless of station). Then I switched jobs and had a 1-hour commute. That second commute was largely on a country road and most of the stations were static. I could catch a Chicago station for about 10-15 minutes on a clear day, then be able to tune into a fuzzy Bloomington station that got steadily stronger for the next 15-20 minutes.

And I had the commercial problems to boot. Sounds like I would be a prime candidate for satellite radio, right? Someone like me should be right in their target market. I even borrowed an XM receiver from my friend Rich for two months to test it out. In the end, I decided against it.

In a nutshell — and this is purely subjective — I think they really screwed themselves on content.

I listened to the comedy and news channels, but they still have commercials. The comedy channels have irritating infomercials, and the talk/news radio channels are loaded with commercials because they’re picking up the feeds from studios broadcasting to terrestrial stations who need to fill up their ad blocks.

I had the same debate of XM vs. Sirius that a lot of people do: which exclusive content do I want? Do I really care about any of it? Maybe I’ll listen to football on the radio, so let’s say I sign up for Sirius to get the NFL (even though it would only matter four months out of the year). How long will that last? The TV networks have been shaken up, what’s to say the same won’t happen to Sirius in a couple years? Then it’s either do without or buy XM gear and a new subscription. How many people did the same thing when Stern announced his Sirius exclusive?

And finally, I wasn’t all that enthused by the music channels. They were okay, but I didn’t think it was worth $13/month (more if I wanted to extend it to both of my vehicles without having to share a receiver). When I bitched, people would say “But you get over a hundred channels!” Yeah? Big deal. I listened to maybe four regularly, and flipped through maybe half a dozen or so more. Tack on country for my wife and we’re still looking at less than 20 channels I give half a crap about.

Three strikes and they were out. I loaded up an iPod with podcasts and was content. And now that I’ve moved so I’m only a block away, it’s really not worth $13/month. I don’t listen to anything at work, with the exception of an occasional podcast. And I’ve got my iPod hooked straight to a pair of speakers for that.

Given all that, here’s where I feel they’ve gone wrong and what it would take to get me to buy into satellite radio. And yes, this is once again purely subjective based on the scenario I outlined above.

First and foremost, cost. If they offered a tiered service like satellite TV or cable, I’d probably jump on. For example, if I could get a couple dozen music channels and some of the talk channels for five bucks a month, it would be worth it for the few road trips I take into town or to visit out-of-state friends and family. If I use it twice for an hour each, I wouldn’t feel so bad about spending five bucks. But $13? No.

Second, while they decided to compete with terrestrial radio, they modeled themselves after terrestrial radio. Why not innovate the whole thing from top to bottom? If they hadn’t signed this exclusive nonsense, they’d probably have spent less money and would get more subscribers. Stern could have been an independent producer selling to both companies (and his nut wouldn’t be riding on the success or failure of just one of them) and his fans wouldn’t have to worry about what kind of receiver came with the car they wanted to buy, or whether the company would go broke two months after they bought their equipment.

Carry the analogy over to satellite TV. Let’s say DirecTV signed HBO and Dish signed Showtime. Think either of them would have taken off like they did? I sure don’t. Even the people out in the boonies or up in the mountains who have trouble getting cable (much less antenna) would be second-guessing themselves over which one to get. Hell, people do that now, but at least it’s over pricing and service not programming offerings.

Finally, programming. Is one really better than the other? Sirius is doing some cool things with celebrity-coded channels, but again, why not let those people go independent? Let content providers selling to either side spring up in place of company-only providers. Then turn around and pick up things like podcasts or Internet radio stations. Spend smarter.

Personally, I think they’ll find a way to get the FCC to approve the deal and they’ll find a way around the monopoly concerns (which I think is more a ploy by terrestrial radio than an actual concern), and the FCC will no doubt impose some regulations. Censorship may come into play as a result, which would suck, but maybe a tiered offerings would become a reality. There’s a hint of that in the Sirius release, and as John mentions in his blog comments, the current head of the FCC is a proponent of a la carte cable offerings (something else I think would rock so frickin’ hard because, as with XM, we watch maybe twenty channels off and on and wouldn’t miss the rest).

If the merger doesn’t go through, it will be the beginning of the end. Maybe a change in attitude would save them, but as things stand, “there can be only one.”

And both of them will suffer until one dies.