Author Archive

Each subscriber is worth $600 to SIRIUS

Saturday, July 22nd, 2006
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At SeekingAlpha Rich Vanden Boogard just wrote: “They continue to lose more and more money as they grow subscibers. Adding subscribers doesn’t mean value’s been added and the stock should go up.”

In this case I would argue that it does mean that value has been added. Each month 1.8% of SIRIUS’ subscribers quit, according to the first quarter results announced by SIRIUS. That means that each year about 21.6% of Sirius’ subscribers quit. That means that the average customer stays with Sirius for (1/21.6%) 4.6 years. At $13 / month, 12 months / year that means that for every subscriber SIRIUS gets $722 in revenue, over 4.6 years for each subscriber that they sign up.

It costs SIRIUS $122 for each subscriber that they attract, according to SIRIUS’ 1Q results announcement.

In my view, that means that every time SIRIUS signs up a subscriber, they are netting $600 in profit. Why then wouldn’t value be added each time a subscriber signs up?

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SunTimes on HD Radio (SIRIUS and XM are gnats!)

Saturday, July 22nd, 2006
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One of our local papers here in Chicago, the SunTimes, has an article about HD Radio where some of the traditional radio broadcasters dismiss XM and SIRIUS as gnats.

Darren Davis, regional vice president in the Chicago market for Clear Channel, the radio giant, said, “Suddenly, there are twice as many radio stations in the market with a wide range of formats. And they’re for free.”

The latter point was a jab at fast-growing subscription XM and Sirius satellite services, which the big boys and girls in traditional radio dismiss as a gnat. A gnat that has attracted about 12 million paying customers since launching in 2001.

HD radio was introduced as a technology in the 1990s. Here in Chicago, in 2006, we have about 15 HD radio stations. I predict that the traditional radio guys are going to have a hard time piecing together the two pieces that they need to create HD as a format: 1. content and 2. an audience.

The cost of creating an HD radio stream is significant, and only a handful of people have the hardware to listen to it (a typical HD radio for your car costs $300), making it difficult for the big radio companies like Clear Channel to justify the expenditure. But until they do justify the expenditure they are not going to have a compelling reason for people to go out and buy new radios so they can listen to HD. A classic chicken-and-egg problem that faces adoption of most new technologies.

SIRIUS and XM also had such a problem, they had to gamble that they could attract an audience after spending billions to launch the satellites. At the rate they are going it looks like they are going to succeed, as they predict they will hit cashflow breakeven within the next 12 months.

It remains to be seen whether the traditional radio companies have the guts to invest significantly in new technology and bet that they can then attract and audience. Even if they do muster the energy to make such a bold move, they are starting late and it is possible that they will never get enough listeners to make it pay off.

Why did SIRIUS Radioand XM have the guts to gamble big while Clear Channel etc. sat by complacently? Because they had nothing to lose. Had Clear Channel pushed HD Radio 10 years ago they just would have stolen their own audience.

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Reuters sees terrestrial radio stocks falling fast

Sunday, July 16th, 2006
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Reuters recently published an article about the faltering prospects of terrestrial radio companies.

The terrestrial guys are in rough shape, ipods, SIRIUS and XM are picking off the most valuable listeners (from a demographics perspective) and are growing fast.

Another benefit to advertisers on SIRIUS and XM is that they can get an accurate count of who is listening. The terrestrial radio broadcasters can only use sampling techniques that can have significant bias in order to estimate their audience.

Google has led the way in making the results of advertising more transparent. I believe that will have a ripple-effect through the rest of the advertising world as advertisers learn to expect accountability and no longer satisfied with wishy-washy estimates of audience participation.

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Stern interference @ MIT

Monday, June 12th, 2006
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The Boston Herald recently published an article entitled Stern Sirius-ly annoys MIT radios listeners about how some radio listeners are accidentally getting snippets of SIRIUS programming, primarily Stern’s show when they are driving next to cars that are listening to SIRIUS.

The reason why that is happening is that the most common way for people to install SIRIUS into their car is with a Portable, or Plug N Play, SIRUS Radio.

SIRIUS wanted to make their basic radios easy to install, so they included a little FM transmitter in each of the basic radios. The user then sets the SIRIUS radio to broadcast on an unused frequency (in the article they mention that many people have tuned to 88.1) and then tunes their car stereo to that same station. The problem in this case is that the little FM transmitters seem to be a bit too powerful, and the signal reaches outside of the car and into someone else’s car.

There are several important issues that this story highlights:

1. in the same way that the signal that your SIRIUS radio is broadcasting can interfere with other peoples’ signals, their signals, or the much more powerful signals transmitted by the radio stations, can interfere with your signal, reducing the quality of your SIRIUS listening experience. The best way to improve your SIRIUS sound quality is to install a Wired FM Modulator Relay ($19.99) or an Auxiliary Input Adapter ($50-$100). If you need help figuring out which one is right for you, email us at sales@tss-radio.com

2. Newspapers (and people) tend to unfairly scapegoat Stern. Just as many people have gotten interference from other SIRIUS stations, like Martha Stewart, and no newspaper picked up that story. Please guys, give Stern a break, he has a really entertaining show that many of us enjoy listening to. We don’t complain about your listening choices.

3. Many modern electronics devices run on old-fashioned radio waves- cordless telephones, cellular telephones, Wireless internet, etc. As devices proliferate there will be more conflicts. One way to alleviate the conflicts is to use the radio waves to transmit digital signals, like SIRIUS does. If FM radio used modern digital technology many more signals would be able to be broadcast on the same amount of radio spectrum and we would all be better off.

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SIRIUS growing faster in Canada too

Monday, June 12th, 2006
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TeleClick in Canada just published an article entitled XM Radio Canada Reports 60% Growth, but Falls Behind Sirius.

Apparently SIRIUS added 100,000 subscribers in Canada from Jan1-May30 while XM added only 75,000. This is exactly the same pattern as in the US. The fact that SIRIUS is gaining in a market where Stern was not initialy as popular and the NFL has a limited fan-base shows just how deep SIRIUS’ content advantage is. Unless you are interested only in music, SIRIUS has a much wider selection of interesting programming than anyone else.

Also, these numbers are almost certainly understated, since many Canadian SIRIUS subscribers actually sign themselves up for the US programming, since it is better. They buy their radio from a SIRIUS vendor that ships to Canada and then either activate it using a friend or relative’s address in the US, or they buy a Pre-paid SIRIUS subscription card.

We really enjoy our Canadian customers and are pleased to ship any product that we sell to Canada.

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S50 Car Kit and SIR-GTRV1 out!

Wednesday, January 25th, 2006
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It’s been a while since the last post. It’s been very exhausting the pace of this business but fun as well.

Okay, to the good stuff.

Got two items in and as far as I’m aware we may be the first to carry these two items.

S50 Car Kits. If you need another car kit for your S50 so as to easily move from car to car then this is the answer. Also for those who’ve been waiting forever for the Home Docks and have been using the adapter to play the S50 at Home you may want to get one of these vs. the Home Dock. Also the Home Dock does not have an FM Transmitter and the Car Dock does.

This is the custom Vehicle Installation Kit that works with the Starmate Replay and Streamer GTR. It’s made for a specific kind of vehicle console that has a large DIN space in which to fit the Streamer GTR or Starmate Replay. The kit includes the plastic Vehicle Interface Kit, a hardwire setup, Wired FM Modulator, and Audio Cables for $29.99. Under Brix it is called SIR-GTRV1 for Directed it is STV2 and SDVK1. As of this point as a dealer we still can’t order it from Directed, and it’s likely not to be out for a few weeks. The FM Modulators are a piece that is often on back order from the Factory and because that piece is included in this kit, I can guarantee this item will go in and out of stock in many places quite often. That being said we bought as many as possible from Brix and will likely to sell them all out by the end of the week.

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Shipping

Friday, December 23rd, 2005
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We always seem to forget truly how busy it gets at this time. The Shipping Services get far behind. We trust USPS and UPS to get the job done, though at this holiday season it is difficult. Most Priority mail takes 2-3 days average. Some people think it takes a definite 2-3 days, but it’s more of an average, in fact many times, especially when things are not so hectic Priority Mail can get there the next day. Well, lot of the Priority Mail shipped out recently has been taking 3-6 days. Ugh. Also had a UPS Next Day Air to Houston that took 3 days. About 70% of the USPS has been 2-3 days but the rest hasn’t. USPS Express has been good and so has UPS 2nd Day Air.

Once a package leaves here it still depends on maybe 6 or so people to get their job done and quickly to get it to you on time.

Well, it’s almost over.

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