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Does Mel Karmazin Realize That XM Isn't The Only Competition?

from the anti-trust-may-be-the-least-of-their-problems dept

At a recent conference, Sirius CEO Mel Karmazin threw out the idea that if the price were right, his company would consider a merger with its fierce competitor XM. He also noted that since the two companies own the satellite radio industry between them, such a merger might raise red flags among regulators. But it may not be as much of an issue as Karmazin thinks, as it’s all about how you define the market. If you think narrowly about satellite radio, then yes, it looks like they’d dominate the market. But if you think of satellite radio as itself a competitor to terrestrial radio, iTunes, subscription music services, internet radio and more, then such a tie up wouldn’t represent a monopoly at all. This point might be seen as the legal counterpart to the idea that media companies should no longer be defined by their media. Going back to Karmazin, this is all something that he should understand. If he actually thinks that his main competition comes from XM, and not from these avenues, then his company is in trouble. Merger or not, he should be guiding the company in such a way that acknowledges that consumers have far more than two options for their music enjoyment. There’s still one major problem though with the idea of a Sirius/XM merger: given all the animosity between fans of either service, will they be able to make peace if they’re combined?

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Comments on “Does Mel Karmazin Realize That XM Isn't The Only Competition?”

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Lisa says:

I Coulda' Been a Contenda'

Sirius’ number one competitor is not XM. iTunes/iPod tops the charts as the majority leader on this topic; XM and then Sirius.

A few other contenders would be yahoo launch and Pandora. If you have a yahoo account, you have access to millions of songs, from alternative, to Chrisitian, to metal, to top 40. If you have not used or heard about Pandora…I seriously recommend checking it out. The Music Genome Project rolled this out. You type in a song or artist and it collects a playlist of music that you would like–songs you that are similar in beat or genre. I think its great and it opens your eyes to more bands and songs that you may have never heard of. pandora.com

Andy (profile) says:

I think I have to agree with Mel...

Are there other services out there that “compete” with satellite radio? Mmmm…. Kinda, but not really.

iTunes/iPod? Well, if you buy every piece of music you are ever going to listen to, then fine.

Launch/Pandora? Great services, but they aren’t really available to me in my car… BTW… I love Pandora. I’ve bought more music recently because of them, than I have in the last two years. My wife wishes I’d never found the service. 🙂

Internet Radio – Again, can’t play it in my car…

Terrestrial radio – Not even close to competition, unless you only listen to talk radio. The music stations on satellite are unencumbered by ads, something that makes the subscription fee more than acceptable to me.

That being said, my house has both systems… I’m a subscriber to Sirius, and the wife subs to XM. I prefer Sirius, as I think that they have a far better selection of music than XM, and the wife tends to agree. But the plain and simple fact that we can listen to a station as we drive from town to town, state to state kicks butt.

Is there competition out there for sat radio? Sure. But once you get it into a mobile environment, and add in the variety of music that you don’t have on your iPod… Then that competition melts away to simply terrestrial radio. Add in the no-ads feature on music stations, you’re down to no competition.

Lisa says:

I completely agree with all of you in saying while driving a car satellite radio is unbeatable, but i think the variable is what you expect to get out of it. If you want to listen any football game or baseball game, Satellite is the way to go. If you simply want to listen to top 40, there MAY be a waste of money. If you are driving through Nebraska, Satellite is great. If you are driving through NYC, probably a waste of money.

Its all about location and how much you want to pay. I recently wanted to buy my boyfriend satellite radio, I was trying to decide between XM or Sirius. A friend of mine works at Z100 in NYC so I figured I would ask him his opinion. He said both are about the same price, the only major difference is baseball vs. football. He also said if my boyfriend has an iPod, satellite is, again depending on location, a waste of money.

RobG says:

I don’t think Mel was really trying to define a market or anything like that, he was imagining a scenario where his company could actually become profitable. Radio is all about the car — that’s where most radio usage happens. Currently, there are three radio choices for the car: terrestrial, XM and Sirius. Terrestrial is about as good for radio as rabbit ears are for TV. So if, as Mel suggested, XM and Sirius merged, they would be the only viable radio option for the car and, therefore, might actually turn a profit someday. Not to mention the fact that they could stop spending hundreds of millions of dollars competing for exclusive content deals.

Internet Radio Listener (user link) says:

Internet Radio...

I already have Internet radio installed and running in my H3. I listen to Internet radio as well as XM. Although, if XM continues to allow Clear Channel to convert previously commercial free music channels to commercial-laden channels…Internet gets better and better. For a great 70’s station you can try http://www.111radio.com.

P Ness says:

Sat Radio will be owned by terrestrial soon

What is finally going to happen is that these radio companies will figure out that instead of having to fight for ad revenue, being a free service to compete with a paid service and all, they are going to go HD radio and start to figure out how to charge for the service.

Stern has proven that you can be a paid service and still have paid ads. best of both worlds.

i forsee a big company like CBS or Clear channel will buy both companies and convert their channels to extensions of the sat service and start charging for the service.

Oh and lets hope the sticker virgins dont invade the board because we said something about Siruis vs Xm..

Sirius says:


Sirius is the best entertainment I have paid for. By far beats radio. More useful that cable TV, meaning I can use it at home, on the road, in my office and with the right radio (which I don’t have yet) while running etc. I think it competes with regular radio, but not ipods. To me IPODs are a waste of time. Even if I did spend 4 hours setting it up for the first time with what I want, I probably would be stuck listening to the same thing for the next ten years. Who has time to work on that crap. I also like talk radio. Sat is great, IPOD stuff (which I tried) sucks. Funny thing is that people who are talented like to get paid for what they do not post it on the Internet for free. I know some ligit people are posting pod casts now, but again what a pain in the ass to get those. I guess I am just either too productive or lazy to spend my time messing with an IPOD.

XM (user link) says:

Re: Sirius

Allow me to review certain points in your comment:

1.) You don’t have time to use an Ipod because it takes 4 hours to set up.

Having trouble with that headphone jack, are you? Can’t quite wrap your brain around the “connect USB port to computer and dock connector to bottom of iPod” concept? They must not cover iPod usage when you go back for your GED.

2.) You spelled the word legit “ligit”

Note to ‘sirius’: Mispelling words and using incorrect english will give away the fact that you are a mental midget.

3.) You claim to work in an office.

I’m sure your bosses are all thrilled with your performance.

4.) You are either “too productive” or too lazy to use an iPod.

I choose the latter.

5.) Podcasts are a pain in the ass to get.

Last I checked, to subscribe to a podcast, one only had to push the subscribe button on iTunes, as simple as buying a song from iTunes. This consitutes a “pain in the ass” apparently. Be honest. Its the reading you can’t handle. Never got past See Spot Run, did you?

WirelessGuy says:

Just don't use it in a thunderstorm

I have XM, and used it for about 2 years now. I got it for NASCAR, and now that is moving over to Sirius. I like it for the fact I can usually find something to listen to when the talk radio shows are going on in the morning. I hate hearing a music DJ talk social issues, like being a DJ makes them qualified to make such comments about life.

The service has really come in handy on my many cross country road trips where nothing else would come in. Try driving Northern Nevada sometime. I had a place where there was no AM or FM.

I do like the new product from XM where you can save the music you listened to and replay. OOOPS the RIAA is on their ass for that one now.

Wifezilla says:

I am a Pod Person

I have an iPod, so does my husband and my son. We all use them at home, the office, in the car, at the gym, whatever. I have never really felt a need for satalite radio. The terrestrial radio channels in my area are actually pretty good and I do have an older car. My speakers make everything sound about the same, so its not like I would notice some huge boost in clarity. (Plus my ear drums aren’t getting any younger.)

I am sure there will be a market for satalite radio…those people in Kansas probably love it…but there are a lot of people out there like me. I don’t think it is ever going to be as popular as some people would like.

P.S. 4 hours to set up an iPod? Are you stupid?

Pod Person says:

Re: I am a Pod Person

I’m a pod person and a terrestrial radio listener.

For all of you posting about how great satellite radios are and how there’s no competition to it, I would have to agree that yes satellite radio probably has great sound quality and having no commercials is great as well; however, I think it’s naive/biased to say that no other medium can compete with it.

All of the technologies listed, iPods, terrestrial radio, hd radio, sat. radio, and internet radio have pros and cons associated with them and each consumer has different wants and needs. As a result, XM+Sirius may corner the satellite radio market, but not the entire music/radio listening market. I think this article is merely trying to point out that if the CEO broadened his definition of his ‘target market’ he would realize that there are other competing technologies out there, and that he could be missing opportunities.

And no, an iPod doesn’t take 4 hours to setup.

Andy (profile) says:

Soon to be a niche market by Aidan
Satellite Radio will fade away to a niche market for people who live or drive in areas without cellular data services. In a couple of years we’ll be using our cellphone accounts to listen to net radio – in our cars, while we’re jogging, wherever.

Last time I checked, the EVDO/EDGE networks really only surrounded the top 200 or so population areas. We’re talking less than a tenth of the US here. Can you get mobile Internet elsewhere? Sure. DirecPC. But you’re going to pay more.

Sat Radio will be owned by terrestrial soon by P Ness
What is finally going to happen is that these radio companies will figure out that instead of having to fight for ad revenue, being a free service to compete with a paid service and all, they are going to go HD radio and start to figure out how to charge for the service.

So then I’ll have to pay for a custom HD radio receiver that knows how to bill me for the time or on a monthly basis for the station I listen to? I doubt it. It will operate exactly like HDTV does. I get 3 channels of HD from my local Fox affiliate, none of which I have to pay for, and the FCC won’t allow them to charge me. Additionally, how would design a system that wouldallow you to pay for such a thing? I’d subscribe my radio to one stream from one company and another from another company? That’s a cumbersome and unworkable business model.

Lastly, to Lisa… It still has definite merit in NYC if you want to listen to top 40. You can listen to top 40 unencumbered by ads. I certainly don’t miss ads. Nothing like listening to 38 minutes of music in an hour, the rest of which is filled by ads for local restaurants, megastores, etc. When I want to listen to music, I want to listen to music. And my iPod? Sure it’s good quality. And yes, I have a lot of great music on it… But I’m not going to get exposed to new music listening to my iPod.

Aidan says:

Last time I checked, the EVDO/EDGE networks really only surrounded the top 200 or so population areas. We’re talking less than a tenth of the US here. Can you get mobile Internet elsewhere? Sure. DirecPC. But you’re going to pay more.

Yes, that was the last time you checked – but I’m talking about 2 years time when 95% or more of the population will have high speed data connections with their cellphone.

Tyshaun says:

It's about the delivery system, not the media....

I think the idea presented in the article is interesting, and thematic to techDirt thinking, but that isn’t how the real world works. In the real world, media is dvided by the way it is disseminated, ad rates for TV and radio are different for a reason. An internet ad is a fraction the cost of a TV ad, for a reason. You can’t just divorce yourself from the fact that how content/ads are delivered directly affects how many people see it, and therefore its popularity/income potential (in the case of ads).

Also, remember that different “pipes” have different things to offer. A print ad on a billboard can reach a lot of diverse people in a small area, making it excellent for regional messages but costly for national campagins, on the other end, a well done TV ad on a national station can reach a lot of people, but doesn’t have the ability to be tailored to a particular region.

Content is a lot more than the bitstream, its also the pipes used to carry the bitstream. I guess this is why I always get so frustrated when techDirt goes on about “new business models” and such, you keep thinking you can magically divorce distribution (the pipes) from the message (media/ads).

Internet Radio Listener (user link) says:

Verizon's EVDO Network

I am using the EVDO network with both my PocketPC and my Dell laptop. It is reliable even while moving in both large and smaller markets including the Palm Springs Valley and all over the San Diego area. Internet radio is coming to your cars and through your headphones on portable media players and PocketPCs. If terrestrial radio doesn’t localize more and give people a reason to listen they will lose audience to newer media. HD is great…if you have the receiver, which VERY few do. HD stations will have to do what everyone else in media does and give people a reason to listen. The ancillary channels will need to be good enough to convince people to shell out cash for the radios. It will be interesting to see how that plays out.

Sirius says:

4 hours to set up ipod

I obviously did not state that correctly. It does not take 4 hours to set up an IPOD in the software / hardware side of things. I am talking about adding content and music. I either have to pay a fortune for music from itues. (if the ipod can hold 10,000 songs I am carrying around $10,000 of music?) I can also rip my CD collection and then load those songs into my IPOD. How much time per disk? Or I can steal the music, where even if I am not opposed to stealing, I still need to find a service, sign up, browse for songs, download said song and put them on my IPOD. Too much work for me for music. Maybe I am just not enough of a music fan. Even to get the pod casts that are automatic I have to search them out, finds the ones I like, subscribe to get them in auto download and connect my IPOD to my computer on a regular basis. That does take more time than turning a channel. Just not a big enough fan to go through that.

PNess says:


So then I’ll have to pay for a custom HD radio receiver that knows how to bill me for the time or on a monthly basis for the station I listen to? I doubt it. Additionally, how would design a system that wouldallow you to pay for such a thing? I’d subscribe my radio to one stream from one company and another from another company? That’s a cumbersome and unworkable business model.


its not that hard, recievers could have the same standards, and like sat radio you have to sub and sign up then the reciever has a code on it that you enter when you sign up…then the radio stations “transmit” the ok that you are signed up, and you are now authorized to listen to the HD stream.

technology is quite easy and only requires a one way communication since you sign up on the phone or internet like sat. the tech already exsist.

now the bad part would be if you had to sub with 3 different companies, like clear channel, infinity and bob’s radio company. but that too can be solved by mergers and “packages” that allow you to buy several companies “programing” under one plan.

Oh and if you expect internet radio to remain free you are quite nuts. if this does become more popular the fees from artist, and licence holders will become more and more expensive…

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