Neither company has ever properly marketed the product --
Of course, in the early stages. All the SDARS proponents claimed that Marketing Expenses would be low. The product was going to "sell itself".. The product and content would be so compelling that the masses would flood to the product.
Now, after a combined 1 BILLION Dollars in marketing Expenses over the last 6 years. Now, the conclusion is.. Neither company has ever properly marketed the product.
People need to come to terms with the apparent.
Of all the OEM promo subs that try the product, only about half actually will pay for it. And to some degree, those only agree to subscribe after what appears to be an expensive round of telemarketing pressure by the companies. On top of that, over 18% of that half deactivate after the first year.
How else do you market the OEM promo subs. They got a FREE radio, they got several months of FREE trial content. They get FREE telemarketing calls from the retention department. You can spend another 1 BILLION dollars on more marketing, but that is not going to buy you any more conversions. The answer is quite evident.
The market for this service is much smaller than the SDAR proponents ever conceptualized.
The Expenses to capture a subscriber are dwarfed by the minimal Revenue generated in subscription fees. The revenue sharing afforded to the OEM's make the OEM subs even more costly.
The point to understand here is this.. CHURN is killing these companies.
And, unlike most subscriber models that incur CHURN, SDARS CHURN is much different.
Cell phone companies report CHURN typically in the 1 - 1.5% monthly range. But, the Cell Phone subscriber simply moves from one Service Provider to another. The contract and Early Termination Fees guarantee that the Wireless Serivce Provider will recoup their Expenses to Capture each subscriber.
In the SDARS industry. With few exceptions, the subscriber deactivates, and is never heard from again.
And so it goes,
PCSTEL |
