Don't let losses fool you: Sirius XM has promise

Sirius XM has suffered through yet another losing quarter. Last week, the satellite radio company reported a net loss of $236.6 million for the first three months of the year.

Although it posted a tough first quarter, CEO Mel Karmazin expressed optimism. Sales grew to $587 million from $270.4 million a year prior, he noted. His company's operating costs dropped 23 percent year over year. And there is more evidence than ever that Sirius XM is slowly inching its way toward profitability, he said in a statement.

Not everyone is impressed. Fellow CNET Blog Network member Steve Guttenberg wrote that Sirius XM is "sticking it" to subscribers. He believes that customers aren't getting enough for what they're paying.

I understand his point. As a Sirius XM subscriber, I wasn't pleased to hear recently that it was raising prices. But that doesn't taint my evaluation of the service. For me, the "Sirius Everything plus the best of XM" package is worth $16.99 per month.

Upsides
I can't get enough of Sirius XM. Whenever I'm in the car, I listen to Howard Stern or Chris "Mad Dog" Russo. They provide a level of entertainment that easily bests terrestrial radio talk shows. Sirius XM's unique content is second to none.

I also love the service's selection. When I want to relax and listen to the spa channel, or get lost at the beach with Jimmy Buffett, I can. If I'm in the mood to laugh, I can turn on the comedy channels. And since my iPod doesn't have all the songs I really love, I can use Sirius XM to find a song for any mood.

I realize that there are alternatives to Sirius XM (more on that in a second), but I prefer satellite radio. When I drive to another state, I never need to flip through channels to find something worth listening to--a major issue I have with terrestrial radio. When I'm at home, I never need to worry about dropouts, since I can stream most of the Sirius XM content through the Web on my computer (though I should note that doing so used to be free but now costs $2.99 per month). Regardless, I'm never without that high-quality content. I'm a happy Sirius XM customer.

Downsides
As much as I enjoy Sirius XM, I realize that it has (significant) issues. There's nothing worse than driving under a bridge and losing my connection midsong. Heck, I even lose the signal when I'm sitting under some dense trees. It really annoys me.

But the main problem Sirius XM faces is competition. I can connect my iPod to my car stereo and listen to all my songs without worrying about dropouts. I can even pop a CD into my player and enjoy that. Plus, I don't need to listen to annoying disc jockeys or pay monthly subscription fees.

Although I enjoy Sirius XM's diverse musical choices, I often use free iPhone (and BlackBerry) applications like Pandora or Slacker Radio to achieve the same effect. I can create stations containing songs from artists I like. Often, I'll find some really great songs that I forgot about. Mobile apps are a great way to enjoy Sirius-like content without the fees.

The game changer?
There's one more consideration of which we can't lose sight: Sirius XM is planning to release an iPhone app that will stream its radio content through the mobile phone. I contacted the company to get details on the app, including information on its pricing. The Sirius XM representative offered no comment.

We might not know much about the Sirius XM iPhone app, but it could be a game changer. Much like The Wall Street Journal, which charges for much of its online content but offers it free on the iPhone, Sirius XM could potentially make its iPhone app a freebie, helping it attract more listeners and sell more advertising.

The mobile app could also eliminate the single issue we all have with Sirius XM: the dropouts, which I already mentioned. If the company's content is being streamed over a Wi-Fi or 3G cellular connection to your iPhone, you'll never need to worry about satellites. It's just like streaming Sirius XM through your browser.

Time will tell how Sirius XM's iPhone app will change the company's business.

The bottom line
Sirius XM isn't perfect. And there are some (like Guttenberg) who don't think the service matches the price. I disagree. I'll admit that the company faces some serious issues that make it more costly and less convenient than a variety of competitors, including terrestrial radio, mobile music apps, and even CDs. But with musical content for any taste, entertaining talk shows, most major sports games, and the possibility of a streaming mobile app, I think that Sirius XM has a lot of promise.

Check out Don's Digital Home podcast, Twitter stream, and FriendFeed.

[hutwarmer]

i havent paid for my subscription for the last 6 months.

They call me every three months and ask if i want to renew with them. I say yes and tell them to send me the bill. I never receive anything in the mail and my service keeps going. I LOVE Sirius/XM radio.

[Toulinwoek]

@hutwarmer: Hooray for you! LOL
Looks like the Sirius/XM folks are "Sirius-ly" stupid to me.

You know, I don't like the idea of paying a price increase for "promise". You wanna jack the price, you'd better jack the value of the stuff you're selling. I'll show you the money when you show me the FULFILLMENT of promise. Makes me wonder who is really the stupid one here.

Hey, I'm a very "promising" writer, but I don't know of any publishers chomping at the bit to pay me a dime.

[rskolin]

I'm with you Don! But I have found fewer stations to like since the changeover. Too many of my favorite music stations have blathering DJ's that talk through the beginning and end of the song, most of which is childish nonsense. Many feel we are just listening to paid FM radio. Us die hard satellite radio fans are losing patience with SiriusXM management, and are dropping multiple radio subscriptions because of this, as well as the price increase. Time will tell if management listens, but so far our cries have fallen on deaf ears.

[cdtphilpot]

I have Sirius XM for years and have even purchased stock. I love their service and despite the occasional under the bridge outage I plan on keeping them for many years to come.

[svk1069]

I love my Sirius subscription. I am a happily paying customer and will continue to do so as long as they offer their service.

[NervClaX]

Yes, free radio is a wasteland. Satellite radio will be dead and gone in just a couple of years. The merger allowed them to save a lot of money by cutting redundant stations and paying just one license for things like sports. I think the leagues are trying to gouge more money out of the combined company, though.

I don't see Sirius XM ever hitting profitability.

The next step (after HD Radio of course) is internet radio in the car. Whether people simply do this through their phones connected to the car stereo or through the car's wi-fi hotspot is irrelevent.

[mikehill33]

Sirius is a mixed bag as far as a company.

Yes, I like the offering of Howard and the music.

No, their infrastructure is terrible. Billing systems don't work, auto-billing fails, and I usually have to resort to calling a person to do what I (should be able to online).

[moon_brain]

I'll believe you when they expand their playlists for their formatted music stations and improve their sound quality. It's compressed digital hash to my ears right now, like listening to a circa 1996 digital answering machine or a 96k mp3 at best. Garbage. And I'm the idiot still paying for it.

[CBattery]

Internet radio will kill satellite radio, no doubt about it. When you can get Pandora in your car and all the free Podcast commentary you can download why would you ever pay $12 or $15 a month for music you can't even keep? Give me 10 free downloads a month (ala the Zune Pass) and you got a deal.

[Slep]

As a long-time XM subscriber (sorry, I still can't get myself to say the "S" word in front of that name), I don't know that I will renew next year because of the fee increases and how the product has gone down hill. The CEO has made numerous bad programming decisions, such as:

1) getting rid of the best morning baseball talk team ever (on MLB Home Plate channel). I miss my daily dose of "The Big Chair" w/Buck M. and Orestes D.

2) eliminated several good daily shows on the MLB Home Plate channel, including Charlie Steiner's "The Beat" and "Fantasy Focus"

3) the DJ's -- excluding on Watercolors -- are all lame. I don't want to hear meaningless chatter. If they want to say something about the song they are about to play or just played that would be of interest to fans, that's another thing. But, instead, they spend too much time trying to be cute and to sound like the very terrestrial radio jocks we're all trying to escape from. This wasn't the case under the old XM, at least not to the degree it is now. There use to be very little talk from them at all, which was a great way for it to differentiate itself from the competition.

4) up the subscriber fee $4/yr.

5) make us pay for the incomplete internet service (add the MLB game coverage and I'm fine with the fee; don't, and I'm not)

6) get their act together in their customer support dept.; too many people have had too many horror stories with them for this to be ignored...as it seemingly has been.

7) not yet offered an ala carte option for those of us that listen to maybe only 15% of the channels. I'm tired of paying for How-weird's, Oprah's, and Martha's salaries when I don't care for their shows and/or opinions. Don't penalize me for these bad contracts. Instead, dump them and spare us all the extra fees.

8) they seemed to have sold off most of their playlist library because now you can hear the same songs over and over each day...just like FM radio. It's sad!

[hazzar]

Sirius-Xm IS perfect... irreplaceable, a must have. The other mobile apps... ie.(pandora,slacker,etc.) are merely fun add-ons.

[gosmith7590]

The problem with digital radio, such as Satellite and HD Radio, is that they suffer from obstructions and dropouts. Streaming Pandora, Last.fm, Slacker, etc are going to eventually kill HD and Satellite Radio. Besides, this farce called HD Radio is nothing but fancily-named formats which are copies off the main analog channels - HD broadcasters have put no effort towards programming:

http://hdradiofarce.blogspot.com

[jim98040]

The amount of money i have spent on music is ridicules... since getting my Sirius subscription in 2004, no more CD's or downloads; I save money.

One of the best things about Sirius is the variety... it endless... it really is all about content. It's like cable TV; would you really ever go back to that roof antenna?

[sting7k]

I too love my Sirius XM service. I always have it on in my car as I think it is much more hassle to control an iPod while driving than Sirius. Especially since Sirius is built into my car so I can control it on the steering wheel. I love Howard Stern and tons of the music stations. It keeps me entertained in the car endlessly, and the subscription saves me money since I don't have to buy songs to put on my iPod or burn to CD (my car also has a 6 disc CD changer which I also use sometimes).

Another problem that I have with my iPod/iPhone is that when I look at the thousands of songs I have; I can never decide quickly what I want to listen too. I can just turn on Sirius XM to a favorite station and they pick for me, they have large catalogs of tracks for every station unlike regular radio where I will hear the same song 4 times a day.

Finally, I was lucky to snag the lifetime subscription back in December when they brought it back. I still get free internet streaming. I hope they release the iPhone app SOON because that will just be icing on the cake for me.

[Faysal21]

I don't understand why Sirius XM feels as if they are competing with listening to music on a CD or the use of an MP3 player.They are two separate things.If you wanted to listen to a specific song or group of songs,you would head straight for that MP3 player and/or CD.On the other hand,if you wanted to discover some new music and listen to whatever comes your way,you would go radio.At the end of the day,it's satellite radio vs. terrestial radio,so why must we mention devices that give us what we exactly want to hear at anytime,when radio is a "you don't know until it hits you" situation?

[Unknown2You]

I love Sirius XM. I have 4 Sirius subscriptions and 1 XM subscriptions. For all the idiots complaining about the play list, the XM guys are programming the music. I love the DJ's like Madison, A.D., Kayla and a few others. I don't mind the 15 to 30 seconds of chatter they do. Madison is hilarious. XM/Sirius is a great way to discover new music without a doubt. And for all the fools thinking internet radio is going to surpass satellite, it will just be a matter of time the carriers will either make you pay an even higher data plan or say that violates their TOS. There are stories nearly daily that say that the cellular networks are already stressed to the max, what makes you think it's going to lessen up with more and more people getting these high end smart phones?

[RT1963]

I love SIrius/XM. Own a lifetime subscription and 50K shares. This company is experiencing abnormal growing pains due to the feds delay on merger. They have an excellent line-up and crystal clear audio. It used to drive me crazy flipping channels on FM every 2 minutes so I don't have to listen to an annoying screaming commercial. I remember the 15 to 20 minutes of FM commercials per hour of programming. I will never go back. Who wants to pay a data plan via the phone company to listen to music? Not me. Keep on keepin' on SIrius/XM.

[gkr-buyer]

stop all your #@$^%^^%$ crying and move on or else you may **** off MEL K. and cause him to quit and then where will we be?

[nowimcool]

In Canada, the companies XM and Sirius did not merge (although the majority of the Sirius stations are from the US so, in a sense they did merge) and Canadian Sirius treated the US merger like it didn't affect them or us at all. So one day, out of no where, all my channels changed, no warning, no email, nothing. And I had been following it on the Sirius Canada forums (which were shutdown shortly after, I wonder why?!)

I unsubscribed a couple weeks later and told them that there were no updates on the merger and I didn't feel that the company cared about it's subscribers. They told me, "XM and Sirius Canada did not merge". It was like they were oblivious to the fact that half of our channels drastically changed/disappeared over night!

On a side note, i hate terrestrial radio too so my ipod is my music ... I don't spend $15 a month on CD's anyway.

[Aphellyon]

Hey Don, I seem to recall you blasting Siri/Xm a little while back on your podcast. Something about the price point not being worth more than 9.99/month... and how they were going to "go away" if they didn't get below it. Now you think it's worth 16+? What gives?