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When satellite radio from XM and Sirius were announced years ago, I thought it was a pretty neat idea. Clear reception, some commercial free channels, and exclusive programming are just some of its features. Those things would be great, but paying for radio? I don't think so. Since its entry in the market, satellite radio has been more of a novelty that you didn't hear much about.
Then just a couple weeks ago, XM announced an 11-year $650 million dollar deal with Major League Baseball to broadcast games to its subscribers. Sirius just recently signed shock jock Howard Stern to a 5-year "multi-million dollar" contract. XM has 2.5 million customers that pay $10 a month for around 120 channels. Sirius only has about 700,000 subscribers and charges $13 a month. Both require you to buy a receiver and pay an activation fee.
Both companies have been making bold claims about their "legitimacy" after signing their high-profile contracts. I think this is laughable. Just because you throw millions of dollars at a person or organization to provide content for you does not make you legitimate. Sirius has lost over $1 billion since its inception in 1999. You are only legitimate when you start to make money. I know I could be eating my words in a few years, but I would be willing to bet that one of these companies will be out of business in less than 10 years. And, I'd be willing to bet that both of them will have a very hard time making enough money to pay these contracts that they just signed.
Why do I say this? First of all, I think this is a very niche market that only a limited number of people will want. I'm thinking the rich who just want to try the newest thing, those that spend significant amounts of time on the road like truckers, the motorhome crowd, and those with long commutes; and maybe those that live in the middle of nowhere and don't get many radio signals. For the rest of us, do we really need another monthly bill?
Of course, traditional radio isn't perfect. Sometimes there's poor reception, too many commercials, and annoying DJs. But a lot of people like their local stations. Most don't mind the music, some become attached to the DJs, and others like the local flair of radio. Even if you don't particularly like your local radio, would you really be willing to pay for a receiver, activation fee, and monthly fee just to add a little more noise to your life? I certainly wouldn't.
Satellite radio's downfall can be explained by the forementioned Geeky Jock Law of Diminishing Returns on Technology. It fits part a), which says that the money you spend for the equipment and service is not worth it because the result is not significantly better than the free radio you already have. Think about it, you're paying around $150 for the equipment and activation, and around $150 a year for the service. You might as well buy a hard drive MP3 player and one of those music subcription services so you can download as many songs as you want. Then you can have tens of thousands of songs you can take anywhere, plus store your other data. Then, if you get tired of all that music, you can throw in a CD. If that doesn't do it, you can turn on the trusty old radio.
Hey, I don't think radio is perfect, but it fills the silence in a car just fine without adding another bill in my mailbox each month. Until radio has nothing I want to listen to or I can't find a CD to play, I'll just say "No Thanks" to XM and Sirius.
