12/08/2005, 12:00pm, EST
Thursday, December 8th
Satellite radio threatens industry, iTunes
The report notes that the new receivers enable users to store much more music from satellite-radio broadcasts as well as manage songs using playlists threatening music labels' more lucrative per-song purchase model and cutting into digital music services' share of the digital download pie. While the iPod has dominated the portable player scene, the variety and extent of satellite programming may be alluring to consumers.
"Because both services offer niche channels, it becomes easy for users to quickly find artists or songs they want and store them. Sirius, for instance, offers channels such as Rolling Stones Radio and Elvis Radio," according to the report.
The WSJ notes that the industry garners much lower royalty rates for songs that are played on satellite radio than it does for songs that are purchased through download services or on CDs. Satellite radio royalty fees are also lower that the charges for songs that play on subscription services, such as Napster.
While the industry, including the big 5 music labels, argue that the new devices are essentially recorders that allow consumers to keep songs permanently without paying the appropriate fees, the services are much like digital subscriptions services run by Napster, Yahoo!, and others: users must keep subscribing to the satellite services to be able to access their recorded songs.
Filed under: industry
Other story tags: digital music/video
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Antenna placement and reception is Satellite Radio's biggest hurdle...
Sat/subscr offers the ability to people to listen to music they don't own (not everyone wants a 20,000 song library just so they can have anything they might want to listen to). Sat radio, esp, also lets you experiment with different styles/tastes of music, without having to just guess what might be considered good. Maybe you'll hear stuff you want to add to your music collection. Plus, you can't get decent talk-radio or sports programming on that ipod of yours. Nor the current weather (not that the weather's tough, just look outside).
As for subscription services, that model has NOT already failed (nice to think it has, but if it did, there wouldn't be any, would there?).
That said, I removed the XM receiver and put in a Dension IceLink to listen to my iPod. I found that when push came to shove, I would rather have _my_ music than someone else's choices.
Forcing me to make a choice was dumb - I would have kept paying the XM fee, had I been able to use my iPod as well. That is what the current services are missing - streaming is a great way to introduce people to new music, but you still need a good purchase-own model for the music they actually like.
Now if a service offered a streaming model with easy purchase and full ownership, then you might have something. I envision something like a free Hearts of Space podcast, but with a 'click to purchase' button to get the current song. That way, I have heard the complete track, and know I like it. Referral revenue provides the upkeep of the podcast vendor, while the actual sale provides revenue to artist, label, and distributor.
Still, XM is a threat in a way, because people do like to hear new stuff, often a few times, before they purchase it. They also want to purchase and own the music they like, which is usually a small fraction of the music they hear. These two things could work together quite well, but the industry wants them to be dueling solutions.
Scott
We just got a new VW that offers both Satellite (XM or Sirius, we went with XM since we hate Stern) and iPod connectivity to the in-dash unit. All factory. It's rather nice, honestly. Do I see myself needing satellite? Not really, tho I do like getting CNN in my car all the time. Is the reception as bad as others cite? NOT IN OUR VOLKSWAGEN!! Cloudy days, hell in the parking deck we usually have signal. Some of the data (show name, etc) won't appear, but the radio service has never once "shut out" on us in the ~2 months we've been using it (with a variety of weather this year! mostly cloudy!), so I think it is a threat to an extent.
What it boils down to are: those anal enough to collect/organize their tunes and those who come to terms with being unable to organize mass music and give control to someone else.