So today’s article in the New York Post headlined “Downed Satellite” includes a one-line quote from me:
The quote elicited a somewhat harsh response from the newly-merged Sirius XM satellite radio network. Chief Financial Officer David Frear tried to dismiss my comment by asking:
“We generated $2.3 billion in revenue for the trailing 12 months, how much did BlogTalkRadio generate? Do they have a viable business plan?”
Before I respond to David’s question regarding the viability of our business plan, let me elaborate on why I think Sirius XM is in for hard times. Here’s a list of obstacles I see hindering satellite radio’s growth:
• The cost of content is way too high. Howard Stern, the $500 million man, is reported to have only 1.2 million listeners to his show a week. And those are not unique listeners. Howard has far and away the largest audience on Sirius. (Take a look at the numbers reported just nine months ago in The Daily News.) Notwithstanding the huge contracts awarded to Rush Limbaugh and Sean Hannity, I believe the days of big radio contracts are over.
• Cars are being equipped with devices that can accommodate Internet surfing. Why subscribe to Sirius XM when passengers can access their Last.fm, Yahoo or Pandora playlists? There are endless choices for streaming music, all far more appealing than the choices offered by satellite radio.
• Cars are also being equipped with iPod jacks and other MP3 accessories.
• When cars can accommodate the Web, why should someone pay a subscription fee for CNN or Fox News when content can be streamed directly off those websites for free?
• There’s a limit to the number of channels – and, thus, content – that can be distributed on the Sirius XM network. In July, more than 4,000 hosts produced tens of thousands of hours of programming on BlogTalkRadio. How many hours of programming did Sirius and XM offer?
• While I haven’t scoured Sirius and XM’s annual reports to determine the cost of maintaining a satellite network, there’s no doubt that a low-cost, Internet-based model for creating and distributing content is far more appealing to investors.
• We live in an on-demand TiVo world. To date, BlogTalkRadio has produced more than 110,000 discrete shows, all of which are accessible via our network. Audiences want to consume content when they want it and not when it’s scheduled. Does Sirius XM make all its content available in archives?
Of course, what do I know? As Sirius XM’s CFO asks, “Do they have a viable business model”?
• Unlike satellite or traditional terrestrial radio, our costs to produce, distribute and store content is negligible.
• We have more than three million listeners per month to shows whose topics range from politics to entertainment to sports to parenting to paranormal. Our hosts produce more than 500 live shows a day, and there is no limit on the number of shows or hosts the BlogTalkRadio radio network can accommodate.
• We aggregate programming by topic, thereby offering a far more targeted audience to our customers.
It’s an interesting debate, and one I’m looking forward to engaging in as it develops.