SIRIUS dials in on satellite market

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December 7, 2006

8:39 PM

During the 1930s, ’40s and ’50s, the purchase of a radio was a seminal event. Families gathered around gargantuan radio sets in the evenings to listen to wartime news, dramatic radio plays and presidential speeches on just a few frequencies.

p. Now, radios are everywhere from personal vehicles to alarm clocks to showers, and have access to myriad listening options. However, as evidenced by the rapidly growing popularity of satellite radio, it is still not enough.

p. Satellite radio is the ultimate paradox: complete standardization with the widest variety of options ever available. Due to this nascent satellite technology, it is now possible to drive from Tacoma, Wash. to Washington, D.C. without ever touching the dial, changing the station or encountering a second of advertisement. Satellite radio subscribers have a wide variety of stations to choose from; however, the stations do not vary from coast to coast, meaning listeners do miss out on the flavor that local DJs provide as well as information on events specific to their area.

p. Just as during the era of terrestrial broadcasting when titans like Infinity Broadcasting and Clear Channel Communications were being accused of stripping radio of its diversity, the medium of satellite radio began to develop as a competitor of the AM/FM giants. Two major companies currently dominate the market for satellite radio and vie for the exponentially growing number of listeners, XM Radio and SIRIUS Satellite Radio. Although XM boasts more listeners than SIRIUS, Business and Industry magazine asserts that SIRIUS is expanding at a faster pace. Currently, the two companies together total approximately 11 million listeners, a significant number, but nowhere close to the average of 230 million weekly listeners that local radio stations receive nationwide, according to Arbitron, the radio ratings provider.

p. SIRIUS has grown at an astonishing rate. The company launched in July 2002. By late 2004, SIRIUS’ listeners still numbered only 60,000. When Howard Stern signed a $500 million deal in October 2004, that number rose to 600,000 strong. Less than two years later, SIRIUS now boasts more than 5 million subscribers. This increase marked a very dramatic growth in a short period of time.

p. SIRIUS, which promotes itself as “the best radio on radio,” boasts over 130 channels, including 69 featuring commercial-free music, and is the only radio station that broadcasts everything from the NFL as well as over 40 NBA and NHL games a week.
Steve Blatter, the senior vice president for music programming for SIRIUS, said that the company is successful because of its variety and exclusive content.

p. “We have an incredible number of niche channels, so there is something for everyone, like Elvisradio, which plays Elvis 24/7,” he said. “We also have MaximRadio, and Shade45, a station where Eminem picks all of the music, or Margaritaville, a Jimmy Buffet station. This is important because, for instance, in New York City, there is not a single alternative rock station or country music station.”

p. SIRIUS has also signed exclusive deals for original programming with Martha Stewart, Jimmy Buffet and Tony Hawk, not to mention its five-year contract with Stern.

p. SIRIUS and XM continue to make new exclusive deals to solidify their hold on the market. For instance, SIRIUS radios are currently offered as accessory options in vehicles manufactured by several automobile companies ranging from Audi, BMW and Mercedes-Benz to Chrysler, Dodge and Ford. This trend extends to the rental car market as well — Hertz currently offers SIRIUS in its rental vehicles at major locations around the country.

p. And that’s not all. In the battle to control this burgeoning market, the innovations just keep coming. SIRIUS recently launched Internet Radio, offering the same services online. Car subscribers still have the option of listening to SIRIUS online, but now it is possible to buy an internet subscription for over 75 channels of 100 percent commercial-free music, sports and talk radio. Internet radio caters to listeners who want to listen to the radio in more places than just their car, or those who do not drive regularly.

p. In further attempts to make itself accessible absolutely anywhere, SIRIUS recently came out with the Stiletto 100, a portable, iPod-size device that receives transmissions from SIRIUS satellites. The Stiletto also allows the owner to store up to 100 hours of tunes in MP3 or WMA format.

p. The satellite market is no longer a secret, and as is to be expected, competitor companies are trying- to edge their way into the radio niche market. Motorola has jumped on the concept of satellite radio in a new way. In addition to offering an internet radio service, which it calls “I-Radio,” Motorola allows customers to listen to a combination of up to six stations or playlists through their mobile phone.

p. The past five years have seen the boom of an industry that has been free for almost 100 years. Billions of dollars have been spent on talent and programming and consumers keep on signing up. This is just one of the components of the increase of technology and information at people’s fingertips, and it appears that it will continue to expand globally.

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