IF YOU CAN’T BEAT ‘EM… Greg Diamond – ByrnesMedia The proposed XM/Sirius merger may have come as a surprise to some, but to most it was inevitable. Projected subscription targets have been lowered numerous times over the past years, both companies have large debts, operating costs are in need of streamlining, and quite simply, neither can afford to try and outspend the other anymore.
So, what happened? After all, these are companies with solid, experienced broadcast management that saw an opportunity to follow in cable/satellite TV’s footsteps and create a unique product people would be willing to pay for. That in itself is the issue, though. The differences between radio and television are such that satellite radio will remain a peripheral player. Let’s examine why that is.
Utility
Radio is a more passive medium than television. Outside of mornings, radio is normally in the background with the user paying little attention to it (other than the appeal of the song currently playing… although that, too, is largely in the subconscious). Television, by its very nature, requires a greater level of awareness. The thought processes when consuming each are quite different, and while there is no less passion for radio than there is for television, it’s TV that garners heightened consciousness, with attitudes toward radio leaning more towards a “take it for granted” frame of mind. This is not an indictment on radio’s ability to produce a product every bit as good as TV (which it most certainly does), but rather a fundamental truth about our industry and one that, ironically, is the basis of its success.
Cable and satellite TV have capitalized on this fact to compel people to purchase programming unavailable on no-charge, network television. Further, these alternate transmission forms also had the “traditional” channels in their line-up, thus giving the consumer a host of new content, while keeping the familiarity of the product high. In short, most people came to see there was little reason not to switch to these services.
Satellite radio has attempted to raise the level of conscious appeal to their product by providing programming unavailable elsewhere. There’s no argument that satellite has more actual variety on average than terrestrial radio, plus they offer a host of news, talk, and sporting content. However, is this enough to have a mass audience open its wallet for both the hardware and programming? We now know the answer to that question is largely no.
Unique
Satellite radio has marketed itself on its unique content. This is an obvious statement since no alternative benefit really exists, but it has also been the Achilles heel of the service. To be unique, sat broadcasters developed micro-niche channels with playlists that are far deeper than its terrestrial counterparts. Again, though, this flew in the face of what the vast majority of consumers really wanted. The percentage of the population that is really interested in an all-“whatever” channel is extremely small. We sometimes forget there are many more audiophiles per capita in the recording and radio industry than exist outside these often cloistered environments.
To be sure, satcasters have always had channels with tighter, more mainstream music runs, but we’re now seeing an even more balanced approach between those and the deeper channels. This goes against their initial variety strategy, but better mirrors the successful television model.
As for the non-musical options, there’s some great stuff on satellite. Yet, to use sports as an example, if I’m really interested in a ball game, I’ll watch it, thanks. If I’m not home at the time, then I’ll DVR it.
Local
This is terrestrial’s greatest strength and one that satellite operators are largely prevented from impinging upon for both inherent and regulatory reasons. XM and Sirius are exploring ways to embed themselves on a more local level, but it still won’t be in the all-encompassing manner vital to successful terrestrial stations.
Commercials
Satellite radio was initially touted as being “spotless.” It didn’t take long, though, before their startup and operating costs forced a reexamination of what can now be viewed as a purely unrealistic model. Commercials have now made their way onto many channels, both music and spoken word.
Next…
It seems like another lifetime since satellite radio was still looming on the horizon and the term “death star” was being thrown around with regards to the potential impact on our industry. We can now say, unequivocally, that satellite radio is not and will not be the end of terrestrial. Instead, they will continue to co-exist, which is actually good for everyone with differing products validating each.
At this point, I’m more interested to see what transpires between XM and Sirius in Canada if the green light is indeed given in the States (by no means a given). Unlike their American counterparts, there is greater disparity between the two entities with Sirius claiming about three times the subscriber base. XM, on the other hand, have touted their NHL package as just one of a few assets which, they feel, even up the value of the companies dramatically… break out the popcorn.
With technology moving faster every day it would be prudent to accept satellite for what it is and now shift our focus to challenges that lie ahead. Other fledgling delivery systems like Wi-Fi/WiMAX could have a very significant impact over the coming years. In fact, once wireless LAN technology becomes ubiquitous, I strongly suspect we will see a broadcast revolution that will force us to rethink all aspects of our business and make the past few years seem trivial by comparison.
These days, when one storm has been weathered, rest assured there’ll be another one on the way… but that’s what makes it fun! |