SATELLITE RADIO ISN’T WORTH $15, YET It may be commercial free, but there is also not enough choice Mark Evans – Financial Post Now that the Canadian Radio-television and Telecommunications Commission has made its decision about who gets to offer satellite-radio service, it is time to take a look at the service itself.
A lot has been written about how subscribing to satellite-radio is a no-brainer because it is mostly commercial-free and, with more than 150 channels, it caters to a wide variety of tastes. Given that more than five million consumers in the United States are paying US$12.95 a month to use a service from Sirius Satellite Radio Inc. and XM Satellite Radio Inc., it must be good, right?
Not to be a contrarian but satellite-radio is far from ideal. Although commercial radio is terrible, satellite-radio programming needs to make some serious improvements before I’m willing to pay $12 to $15 a month for it.
Surprisingly, one of the service’s big weaknesses is lack of choice. With more than 150 channels, you would think there would be something for everyone. The problem, however, is many of the channels are trying to serve a large enough audience to justify their existence on the “dial.”
This means, for example, the rock channels are fairly generic. They can label them alternative or Hard Rock or ’90s but they play a wide variety of music rather than serving a specific genre.
Personally, I’m a fan of artists such as Lyle Lovett, Wilco, the Old 97s, Sun Volt and the Jayhawks but there were no channels on XM Radio that served up a healthy helping of this genre of music. In theory, this should be satellite-radio’s “killer app.” There should be hundreds of channels being delivered to serve macro and micro-audiences.
So far, Sirius and XM have been in aggressive subscriber growth mode as they work to establish a competitive beachhead after spending billions to get their systems up and running. This explains why they have spent so heavily on mainstream programming such as Major League Baseball, the National Football League and Howard Stern, which appeal to large audiences.
In time, I suspect satellite-radio programming will become more niche-oriented. As XM and Sirius become more established and have millions of people paying a monthly fee, they will be open to taking more programming risks.
Of course, one of the big fears in offering a wide choice of programming is the “500 channels and there’s nothing on” issue. While choice can be good, it can also be overwhelming if it is difficult to find the programming you want.
This is another significant challenge for satellite radio providers. How do you give people tools to discover what’s available? In the television industry, they’re using interactive programming guides to make it easier to search for programming. How satellite-radio does it using a small screen will be a neat trick.
Despite these challenges, there is no doubt satellite-radio will experience strong growth in North America as long as commercial radio continues to rely on computer software to create programming that plays the same songs over and over again. Solutions Research Group expects there will be one million satellite radio subscribers in Canada by 2007.
However, at some point satellite-radio is going to have to reach out beyond the early-adopter demographic. This may mean the creation of a Wilco/Old 97s/Lovett channel. When this happens, I’ll happily sign up for satellite-radio, and leave the pathetic world of commercial radio far behind. |