By Larry Johnson, Paragon Media Strategies
Satellite radio is fascinating. Of all the different platforms from which an individual can obtain and hear music, satellite radio is among the more viable and instructive.
When satellite radio first came out, I was skeptical. It appeared to be a black hole for investors. Why would people pay for something that over-the-air (broadcast radio) already provided for free and with convenience? Yet, whenever I spoke with a satellite subscriber, they would sing the praises of satellite radio. At first, I thought these subscribers were outliers, but then I began to research satellite radio. Currently, there are 31.3 subscribers according to a Forbes article dated February 16, 2017. Granted there are free riders who get satellite radio for free for a few months when they purchase a vehicle. Nonetheless, there are over 26 million self-pay satellite subscribers. Factor in that more than just the subscribing person in the family use the car and there are more actual listeners. A conservative estimate is that 10% of the U.S. population listens to satellite radio in an average week and that percentage could be significantly larger. When I first started researching satellite radio, 9% of Americans listened to satellite radio in a given week. So listener trends are up.
And, Sirius XM actually posts a profit for investors; something other digital music platforms have found elusive.
Seeing an oncoming competitor, broadcast radio hastily seized on HD radio. Licensees of frequencies on the FM band could expand the number of stations they already owned. Program directors were asked to come up with one or two additional stations sometimes within a week or two. HD radio has been a dud because people didn’t purchase HD radios. Also, the use of HD radio stations via the internet rarely finds its way into ratings measurement. The best hope for HD radio may be that a few of those channels are on the satellite radio HD band.
Over-the-air (broadcast radio) stations and services like Pandora and Spotify offer free audio programming. Yet, satellite radio thrives because people are willing to shell out a few bucks a month for satellite radio. Why?
Music services like Pandora are interesting. Pandora is easy to use. However, the listener can tire of the occasions when he/she is regularly clicking the thumbs-down button. There is also Pandora fatigue that occurs when the content loops back onto itself in a numbing circle of similar songs without variety or evolution. Pandora’s music genome project is fascinating, yet ultimately someone is programming it behind the curtain. Despite all Pandora’s negotiations for music licensing, Pandora still doesn’t turn a profit. And, after too many thumbs down clicks, the listener loses control of the music for the day. This loss of control comes from music licensing considerations.
So Pandora, despite being very user-friendly, still requires a modicum of work and sometimes leaves the listener unsatisfied. With the installation of Sirius XM in cars, people are introduced to a world of literally hundreds of well-thought-out stations. The only effort the user has to do is change channels from a carefully designed list of formats. One could argue that the playlists/rotation are too short, but hey you’re only in the car for a limited period of time.
Spotify is less rigid than Pandora and is more of a true music discovery experience. In addition to songs and artist catalogs, Spotify offers playlists from known publishers, including radio stations. Their weekly new Discovery songs feature is well-known and heavily used. However, Spotify’s platform is not user-friendly and can be clunky to navigate.
Slicing and Dicing the Formats
Having worked with all sorts of radio formats and actually having designed a few myself, the way Sirius XM slices and dices formats is really interesting. While all of us radiophiles think we can design something better than the next person, Sirius XM has arranged an expansive pallet of formats. Not only are all the format categories available, but Sirius XM has gone to great pains to artfully combine formats. Being an old Rock jock, I’ll use Rock examples. For example, Adult Album Alternative (Triple A) is available on their Spectrum channel and various channels that could also loosely be deemed Triple A are arranged by era and/or texture-tempo. New formats (e.g. Pop Rock) are continually being introduced and specialty channels (e.g. Labor Day Highway driving) pop up for a few days. And if that’s not enough for you, there are specialty channels; i.e. Little Steven’s Underground Garage and the Tom Petty Channel. These specialty channels give license to creatively inspired programmers/musicians to play whatever they want — or at least a credible illusion thereof.
So for a few bucks a month it’s no wonder so many people are willing to go to satellite radio. Some broadcast radio seems pale after listening to satellite radio. The creativity and personalities that once drew people to broadcast radio are all there on satellite radio, and without the commercials! If you don’t like what’s on a given Sirius XM channel at any given moment, there are ten other stations you can punch into for a slightly different groove.
The kicker is that Sirius XM is sustainable, and it pays the music license royalties that actually pay artists for their product. We see lawsuits that seek to restrict accessing on-demand songs via the internet. Indeed, some of the songs I’ve called up recently have been blocked. The “I want what I want when I want it, and I want it for free” mantra doesn’t allow the producers of that content to survive. Satellite radio provides a model for sustainability. Not only does satellite radio permeate cars, but I’m hearing more and more stores, restaurants, and other businesses using Sirius XM as their in-store music service.
So where does this leave broadcast radio? Although broadcast radio reaches over 90% of the U.S. population weekly, Time Spent Listening continues to decline. That shouldn’t be surprising with the number of competing platforms for musical delivery, especially satellite radio and online services like Pandora and Spotify. Broadcast radio is just so damn convenient…like a free utility. It also provides an introduction to new music for many people and personalities (particularly morning shows) provide a friend to listeners. But let’s be honest, the role of personalities has been radically diminished given budgetary considerations. It’s much easier to contract someone to voice track than pay a personality a salary. Those of us who love radio may be well advised to delve into these other platforms (add podcasting to the list) to supplement or fall back on. CBS News cites CareerCast’s findings that disc jockey is one of 10 worst jobs. It seems that many factors are leaning into long-term sustainability for satellite radio.