In case anyone is still reading this board besides myself, here is the US News and World Report article on XMSR and SIRI.
KS
Songs by satellite to suit every
taste
Will drivers pay for programming choice?
By Pamela Sherrid
On May 8 a rocket is set to lift off from a converted oil-rig platform
in the South Pacific, placing a powerful commercial satellite in orbit.
Music lovers might want to keep their fingers crossed. If the launch
goes as planned, in a few months radio listeners will be able to tune in
to 50 new 24-hour music channels. Count on nine featuring different
styles of rock-and-roll (one just for heavy metal, another for classic
rock) and five distinctive country channels, plus others specializing in
classical, salsa, reggae, blues, or kiddie tunes. Commercials will be
limited to six minutes per hour–compared with up to 22 minutes for
FM. Another 50 channels will bring talk and news, with programming
ranging from Bloomberg's business report to NASCAR racing. Since
the channels will be beamed nationwide, listeners won't have to fiddle
with their radio dials to catch a new signal on a long drive.
The catch? To tune in, consumers must pay a monthly fee of $9.95,
plus at least $300 to buy the signal-receiving hardware. "By offering a
premium service, we want to do for radio what cable did for TV,"
says Hugh Panero, chief executive of XM Satellite Radio, the
Washington, D.C.-based firm that is launching the May satellite.
Betting on choice. It's a huge business gamble. XM will be
competing with a rival, Sirius Satellite Radio, which pioneered both
the concept and technology. Together the two firms have already
spent over $3 billion on satellites and programming facilities. Their
efforts come on the heels of the spectacular $5 billion failure of
Iridium, another satellite venture that misjudged demand for global
telephone service. Will satellite radio be another Iridium?
The technology's biggest selling point is eclectic programming.
Broadcast radio is stuck in a highly profitable pop-format rut. Fans of
genres such as New Age, salsa, and modern jazz account for a fifth
of recorded-music sales. But that music is harder to find on the air
than good taste in a Howard Stern show. Detroit has no classical
music station. "We want to serve diverse tastes not satisfied by
terrestrial radio," says XM's Panero.
The technical challenge is to deliver clear, uninterrupted digital sound
to cars driving anywhere in the continental United States, including the
canyons of Manhattan. Whether that challenge has been met won't be
known until the systems are up and running. (XM plans on a
late-summer debut; Sirius has been delayed by glitches in developing
its receivers but hopes to start service before year-end.) Satellite
radio could also suffer from its lack of local traffic and weather
reports, big draws for local stations. And then there is the fallibility of
market research: "How many customers will actually pay $120 a year
for what is currently free?" asks P. J. McNealy, a technology analyst
at Gartner consultants.
The rivals face a daunting job in educating consumers about the new
medium and establishing brand identity. XM plans a $100 million
advertising campaign by TBWA\Chiat\Day, the agency that created
the Energizer Bunny. Sirius has Goodby, Silverstein, the agency
behind the "Got Milk?" and E*trade ads. One key differentiator:
Sirius will have no ads on its music stations. The company also counts
on its cute dog logo (Sirius as in "Dog Star," the sky's brightest star)
to stick in consumers' minds. "It's not really my style," says David
Margolese, Sirius's cerebral CEO, "but my wife said, 'You've got to
keep the dog.' "
Radio gear to pick up XM is starting to appear at retailers like Best
Buy. But the new medium's success, says Morgan Stanley Dean
Witter analyst Vijay Jayant, depends heavily on how quickly
automakers equip cars with radios able to pick it up. General
Motors, a shareholder of XM, says it will offer the radios as an
option in this fall's Cadillac DeVilles and Sevilles. Sirius will be an
option in some 2002 BMWs, and the firm has deals–without
timetables–with Ford and DaimlerChrysler. Both satellite companies
would love eventually to see their subscription fees bundled in
auto-lease or finance charges. As a lure, they are already giving
carmakers a share of subscription fees garnered through new car
sales.
As the first innovation in car radio since FM's advent in the 1970s,
satellite has an enticing opportunity. But it may not have the road to
itself for long. Advanced terrestrial cellular networks could stream
music to cars in three years or so. Such wireless services could offer
interactivity, perhaps letting drivers punch a button to buy a recording
they just heard. But interactivity is arguably more suited to the home,
where people have their attention and hands free, than to cars, where
satellite sees its main market. Claims Sirius's Margolese: "We own the
pipe to the car." |
