Yay! It only took 13 months to prove that a combined XM and Sirius would still have competition! Duh.
As everybody inevitably knows by now the U.S. Department of Justice (DOJ) approved the XM-Sirius merger yesterday (March 24, 2008) stating that a combined entity would not be anti-competitive. It’s not officially official (yes, that’s an “official” term) yet as the FCC still has to issue its approval, but that’s expected shortly.
So the right thing happened. Common sense prevailed. But apparently not without a lot of angst, lobbying money, and silly ‘demands’ from the terrestrial radio companies. This merger is in the best interest of the consumer. It provides more choice to listeners and a tiered a la carte pricing plan – one which wouldn’t have happened if the merger didn’t go through.
There are varying viewpoints on this of course (see Jerry Del Colliano’s Inside Music Media column) but to me it’s quite clear. The developments of the last 6-7 years in the radio/music industry have changed the standard definition of “competition.”
For illustration purposes, let’s go waaaaaay back in time…back to the ‘dark ages’ of 2001. Back when you mentioned the words “satellite radio” to someone they would respond with a puzzled look and say, “Huh? What’s that?”
When XM launched its service in September 2001 and Sirius followed in July 2002 they were the “next big thing.” Back then options were extremely limited for radio listeners and for consumers of audio entertainment in general.
But now, uh, not so much.
It’s a brave new world out there. The landscape is TREMENDOUSLY different now. Since XM and Sirius launched the following has happened:
- iPods were introduced (in October 2001) and have become the phenomena that they’ve become. To date over 140 million iPods have been sold worldwide. And people use them in their cars. As just one example, Ford has recently introduced their SYNC – which enables various media players to be fully integrated and voice-activated in the car. Pretty cool.
- iTunes was introduced. It took Apple to figure out what the record companies couldn’t.
- FM has improved tremendously (thanks to the competitive threat of satellite radio and iPods)
- People download and listen to music on mobile phones.
- In addition to just downloads, mobile phone providers offer streamed services.
- HD Radio is up and coming.
- Internet Radio has become more of a “thing.” Regular people actually listen to it now as opposed to just the real fanatics back in the day (that would be me). And it’s not just the streaming of existing stations that is making an impact, but new, unique listener-driven services like Last.fm and Pandora.
- And who knows what’s next – in fact in the DOJ statement on the merger they made reference to the fact that “a number of technology platforms are under development that are likely to offer new or improved alternatives to satellite radio.”
But just as importantly, along with all of the technological advances, there has been a not-so-subtle mind shift in consumers’ attitudes. People now realize that, dammit, they want what they want, when they want it, where they want it and how they want it. Oh, and they would prefer if it were free.
So XM and Sirius weren’t just fighting each other. They were fending off all of the other technologies, devices, options and attitudes. Now that they’re combined, however, competition is still the issue! But instead of the question of whether the combined entity would be anti-competitive, it’s an issue of how the combined XM/Sirius will fend off the vastly increased competition from all sides, with many of those options being free options? The question is that even given the reduced costs of a merged company, is there a business there?
It’s a good question. And a fundamental one. But the answer is simple.
Yes.
Because it’s all about the content. And people will pay for good content if they can’t get it anywhere else. But it has to be properly articulated to them why the content is better. They have to see and hear that the content is “bigger, faster, stronger” than what they can get elsewhere – for free. XM did an excellent job of articulating these things to a skeptical audience when they launched and Sirius let Howard Stern do their talking for them.
And another thing. Though it’s been fashionable to declare radio dead among some of the uber-know-it-all’s – it’s not. Radio is still alive and well, thank you very much (in spite of the U.S. radio industry’s best efforts to smother it to death!) and that includes satellite radio. In particular, satellite radio has the ability to take the things people love about radio and go “one louder.” They offer a range of content that is broader, deeper (when appropriate) and more unique than what they will get in an FM station and most of the online streams offered by the existing terrestrial radio companies. They have the resources and credibility to attract major artists to do exclusive performances, interviews or even host specialty shows (see Bob Dylan’s Theme Time Radio Hour on XM). They can and do bring back things that people used to LOVE about radio. Personality. Fun. Entertainment. Companionship. Serendipity. DJ’s who aren’t bound by a 12-second time limit and having to say the call letters 3 times during the 12 seconds. Introduction to new music – and so much more.
But I’ll save those for a later time.
Tagged: Competition, Merger, Satellite Radio, Sirius, XM