Technologizer

Sirius XM announced two new XM receiver devices this week – the Skydock ($120) and the Onyx ($80). Both are scheduled for a fall delivery and, I’m guessing, they’re targeting different audiences. While choice is good, I’m not sure the Skydock will be worth the 50% premium over the Onyx for most.

The XM Skydock essentially turns an iPhone or iPod touch into a satellite display and controller tethered inside a car. Whereas the Onyx, for $40 less, sticks with the more traditional plug & play receiver form – and is bundled with a vehicle kit, but presumably home kits and maybe even boombox accessories (like this) will be available. Making it a more practical option for many. One device, one subscription, multiple locations. Additionally, as most folks know, the iPhone has a small problem with third party multitasking. Meaning, that while an iPhone may make a great satellite receiver when paired with the Skydock, you’ll have to stop the music to navigate or take a call. (Sirius XM could have minimized this limitation by integrating some sort of speakerphone functionality, perhaps utilizing the car speakers.)

I’ve got XM built into my vehicle, so I won’t need to make this decision. But I’m wondering which side other folks will fall on. Assuming you find satellite radio worthwhile.

[This post republished from Zatz Not Funny.]

Sirius XM continues to bleed customers, although at a much slower pace than the first quarter of this year, numbers released Thursday morning show. The satellite radio provider shed 186,000 customers in the second quarter, an improvement from the 404,000 customers it lost in the first.

Regardless, the satellite radio provider is still losing customers, the wrong way to go when you’re already struggling to make money so as it is. Pro forma revenue was in at $608 million, which was a 1% improvement year over year. Losses were $171 million, an improvement over last years $203 million loss.

Some of this improvement can be credited to a further reduction in subscriber acquisition costs, now down to $57 from a year ago. Additionally, monthly average revenue per subscriber edged up 11 cents to $10.66.

It is also continuing to pull a bigger profit from operations, now up to $132 million in the current quarter.

There is still trouble ahead for Sirius XM however. Beginning this month,  a $2 royalty fee at minimum will be tacked on to every subscriber’s bill. It will be interesting to see the effect this may have on subscriber numbers. If we see a worsening again in the third quarter numbers out this fall, we’ll know the likely cause.

Regardless, the company must keep a hold of its customers. All this improvement can easily be stymied or wiped out if the company has an increasingly smaller base of customers. The biggest thing now is focusing on keeping current customers happy.

Programming — which from the looks of things appears to be Sirius XM’s weak spot — is job one. It’s clear that many are not responding to the “FM-plus” strategy carried over from Sirius, and much rather would prefer deeper playlists, which was XM’s biggest strength.

I’m reserving judgement until next quarter whether this merger can ever be a success. I’m still not sure yet.

Yesterday I canceled my XM satellite service after five years. Today, the company asked me to take a survey for departing subscribers. It was filled with the questions you’d expect–mostly ones on why I chose to cancel. But one question focused on what might have gotten me to stay, and mentioned some specific price points:

Currently, XM costs…well, that’s a complicated question, but the standard package is now $12.95, plus a $2 music royalty fee, plus $2.99 if you want to listen online and/or on an iPhone. Other options start at $9.99, and it’s possible to spend $21 a month if you go for the “XM Everything Plus the Best of Sirius” package and want to listen online.

I don’t think any of the scenarios outlined in the survey involve a permanent price break–they’re likely sign-up deals, not unlike the ones that cable companies offer. Oddly enough, the deal that Sirius XM offers to try to convince folks not to cancel isn’t mentioned: $77 a year.

Truth to tell, I’m not sure if Sirius XM can charge less than it does: Between the cost of the satellites and the cost of music royalties and the money it’s forking over to folks like Howard Stern, Oprah, and Major League Baseball, it’s an inherently spendy business.

Incidentally, the “Mostly Music” and “Sports, News and Talk” options mentioned above are trick questions: XM already offers them and is apparently trying to determine if people know they exist. (I didn’t until recently, and might have sprung for one if it wasn’t for the fact that neither one entitles you to pay $2.99 a month extra for online listening.)

How much is satellite radio worth? Well, it all depends on how much you listen to it. But to repeat myself, what would tempt me right now is a plan aimed at folks who only want to listen on an iPhone. If the rep who took my call yesterday had offered me that for $99 or so a year, I wouldn’t be ex-XM.

Last week, I was thinking about replacing the XM satellite receiver in my car with my iPhone 3GS.  Now the deed is done: I called XM this afternoon and canceled my service, more than five years after I first became an XM fan. From now on, nearly all the audio I listen to in my car will be piped from my phone. (I do listen to local NPR stations, and may continue to do so via Plain Old FM Radio at least part of the time.)

I enjoyed XM enough over the years that I’m not leaving as an unhappy camper, even though the last couple of years were pretty dang rocky–the service kept raising prices (it now charges $18 a month for what was once $10) and dropping stuff I liked to listen to (Harry Shearer, all of MSNBC). But I don’t want to fiddle with two separate devices in my car, and when I had to make a decision, I opted for the iPhone. It gives me tens of thousands of radio stations for the cost of my AT&T data plan. Plus customizable “radio” from Last.fm, Pandora, and Slacker. Plus a bevy of podcasts. Plus audio books. Plus all my own music. Given all that, I’m willing to live with the fact that it’s not as convenient a car radio as my XM Xpress receiver was. Did I mention it also does GPS navigation and lets me make phone calls?

Some folks have reported having trouble canceling satellite radio or being offered cheap or free service as an enticement to keep the account. I had to wait a half hour on hold to speak to a real person, who offered me a $77-a-year deal if I’d reconsider–but one that would only kick in when my current subscription ended next March, and would then extend to March, 2011.

In other words, even though I told him I was canceling because XM was too expensive, he suggested paying the same rate for eight more months, then continuing to pay for another year beyond that. I declined the offer; he canceled my service.

What XM didn’t offer me was the one thing that might have kept me around: An iPhone-only subscription at a competitive price. (The $12.95 Sirius XM wants for online listening is too much given that it’s the same as the base rate for satellite listening, for a lineup that lacks much of the service’s signature programming and has dozens fewer channels.) I’ll bet I’m not the only XM defector who might have stuck around for a decent iPhone plan…and if it ever offers one I might be back. But for now, I’m ex-XM.

I’ll let you know how my iPhone-as-a-car-radio experiment goes. I already know I like the three customized 1960s stations I’ve created with Slacker a lot more than XM’s Sixties on 6…

While Sirius XM may not be having much success keeping customers, it seems to be having a good deal of good fortune attracting listeners through its App Store offering, apparently. In the first two weeks of availability, the Sirius XM application has been downloaded 1 million times.

Sirius XM Premium Online is free to download, however it requires a premium subscription to listen. For current Sirius XM customers, that means a $2.99/month extra fee — for non subscribers, that’s $12.99/month.

Regardless, its now the 7th most downloaded app overall, and #1 in the Music category. Lord knows if people are actually shelling out the $13 bucks for the service (I know I wouldn’t), but it’s a respectable showing.

I’ve been making noises about the idea of retiring my XM satellite radio receiver, canceling my account, and using my iPhone as an audio device in my car for a while now. The more XM charges and the less I like its programming, the more tempting the idea becomes. Now I’ve finally gone and taken a necessary step: figured out a workable way to pump my iPhone’s audio through my car stereo.

This was surprisingly difficult, which one reason why I’ve dawdled as long as I have. My car is a 2004 Mazda3, dating from an era in which cars didn’t come with iPhone integration and even mundane AUX ports were rare. (I did pay extra for a six-CD changer…which I ended up using maybe four times.) I went through an array of wireless FM transmitters for both my various iPods and my various satellite radios, and even the best ones were staticky hassles. I also spent more than $100 and a considerable amount of time on a fancy-schmancy kit that connected my iPod to my Mazda stereo system–it sounded greated, but caused the iPod to have some sort of digital nervous breakdown that rendered it unusable.

Continue reading this story…

Already peeved satellite radio customers will have one more reason to be upset with Sirius XM: yet another rate increase. While you were able to escape the last one by simply electing to forgo online access, this one is unavoidable.

Every subscriber will pay at least $2 more per month. The reason is this: beginning in August, the company would be able to raise rates to cover the costs of higher royalty payments to the record companies.

The royalty rate increases were allowed by the FCC as a result of a December 2007 agreement on those rates. The company was not able to pass along these increases due to the stipulations of the approval of the merger. However:

“After the first anniversary of the consummation of the merger, the combined company may pass through cost increases incurred since the filing of the combined company’s FCC merger application as a result of statutorily or contractually required payments to the music, recording and publishing industries for the performance of musical works and sound recordings or for device recording fees.”

That anniversary is coming up on July 29. According to unconfirmed reports, after this date a $2 charge on the primary radio, and a 97 cent charge on additional radios will be applied as a “royalty fee.” In other words, you will be paying at a minimum $14.95 per month for service.

People with knowledge of the situation are quick to point out that this isn’t an increase from Sirius XM per se, but rather a pass through of charges that were already being paid by the company because it can no longer afford them. You don’t say–after all its financial situation is pretty damn bad.

(See this link for a copy of the internal memo to customer service reps who are sure to be facing the brunt of yet more consumer dissatisfaction.)

Worse yet, this fee will increase by .5% per year through 2012. Thus it will be at least $2.10 in 2010, $2.21 in 2011, and and $2.32 in 2012. So much for those rate freezes eh?

This is really bad for Sirius XM. The Internets are flooded with consumer complaints about the service post-merger, and many are looking for a reason to drop sat radio like a rock.

I don’t see how the company doesn’t lose more customers over this. The company better get more responsive to programming complaints or there may be big trouble in sat radio-land.

Sirius XM customers out there — is this the last straw for you?

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Despite the company’s best efforts to sugar coat it, Sirius XM is in trouble. The company shed just over 404,000 subscribers in the first quarter, as far as we can tell the first ever where the company combined or separate has done so.

Losses also widened to $236.6 million, more than double the $104.1 million loss a year earlier. Pro forma revenues clocked in at $587 million. The company did report a $108 million profit from operations, its second quarter of doing so.

The loss came as a surprise to Wall Street, which expected the company to continue adding subscribers on a much smaller loss. Miller Tabak & Co analyst David Joyce told CNBC that he believes subscriber loss will offset any gains from cost-cutting measures, a problem for the company.

We’ll give some credit to the company for reducing its costs, such as the subscriber acquisition costs, down to $61 from $82 a year earlier. However, the signficant loss of subscribers is very troubling.

Sirius XM is quick to blame the automobile industry’s woes for its problems in attracting customers. While yes, the auto industry slowdown is exacerbating the problem, it is not the cause. It’s the company itself.

For all intents and purposes this company is being horribly managed, especially in the programming department. We’ve already covered the hot mess that is the DSquared show, but there’s more. It’s as if the service has hired complete novices to program its channels.

I’ve watched the fan boards for awhile, and over and over again its the same story. Music on a channel that is either completely off format or just plain bad, or DJs who make the stations sound like FM.

That is the central problem for Sirius XM, not the automobile industry. Start running your programming department correctly, and you won’t have such a problem keeping people.

It’s no secret that a lot of satellite radio users are quite unhappy with the merger of Sirius and XM. Sirius XM has taken a beating for its questionable programming decisions, as well as its sometimes apparent obliviousness to channel formats.

The latest example involves Sirus XM’s BPM channel, the service’s supposed dance station, which has been anything but lately. Fans have voiced their outrage across the Internet, from Sirius XM fan boards to the channel’s Facebook page. That anger reached a fever pitch Tuesday night with the debut of the Dsquared show.

Dsquared is Dan and Dean Caten, a fashion duo from Europe. What is their connection to dance music? Who knows. But their new show debuted Tuesday night, called Dean and Dan on Air: Style in Stereo. What followed was the most stereotypical portrayal of the gay community I have heard in a long time.

While the music they played was one thing–completely off format–the way Mr. and Mr. Caten portrayed themselves was Godawful.

When you could understand them (they mumbled for 50% of the show), their topics of discussion had nothing to do with dance music. They also reinforced the stereotype of the effeminate, fashion-loving, and pretentious gay man–to the point it was grating.

I don’t know where Sirius XM and BPM are trying to go with this, so I won’t even guess. In any case, the show not go over well at all with listeners. On BPM’s Facebook page, not a single review was positive. Here are a few examples:

I am a young gay man. And those two things that were on the DSQUARED show. So distasteful. That show needs to be pulled off ASAP!

These guys give gay people a bad name, seriously. Way to set gay rights back 100 years. Awesome job! NEWS FLASH, there are more than just gay people listening to dance music.

this show is horrible, and sxm should be ashamed of themselves for putting on such a stereotyping show…

This dsquared show is beyond terrible….GET RID OF IT!!!!!!! Dance music does not equal fashion in America…not everyone who likes dance music is gay (no offense to gay people)

I can’t say it much better than these folks. If you’ve got satellite radio, I suggest you also take a listen for yourself–here’s the schedule. Please take this mess off the air, Sirius XM. And start listening to your subscribers. After all, they’re paying your paychecks.

I’ve written a fair amount about the annoying post-merger state of Sirius XM satellite radio, as well as chatted about it with folks offline, and nearly every time I’ve expressed frustration, I’ve said something to the effect of “if it weren’t for baseball, I’d consider dumping XM and just plugging my iPhone into my car stereo so I can listen to streaming radio apps.” And I’m sure there are other folks who feel the same way.

Looks like that “if it weren’t for” will soon be inoperative. My friend Jason Snell of Macworld has blogged that the upcoming 2009 edition of the MLB At-Bat app for the iPhone will support Gameday Audio, allowing baseball nuts to tune in their hometown broadcasts (that would be the Red Sox for me) on the phone. As Jason writes, MLB At-Bat costs $5 and PC-based Gameday Audio costs $15 a season. But you gotta think that there’s no scenario in which Gameday Audio on the iPhone won’t cost far less than I’m shelling out for XM.

Is anything else that’s exclusive to XM so lovable that I’d keep the service to get it? I’ve grown sort of fond of the Siriusly Sinatra station, with its shows hosted by Nancy Sinatra and Jonathan Schwartz. But I think I can tune in Schwartz on an iPhone via his WNYC gig, and I suspect I can find enough standards music on the iPhone to keep myself entertained.

Oh yeah: I also have to figure out the best way to let my car stereo–which lacks an AUX port–tap into the iPhone. I have terrible luck with wireless FM transmitters, and have been using something called an FM Direct adapter that lets me connect my XM receiver directly to my car’s antenna. It works wonderfully well, but I don’t know if there’s anything comparable that’s iPhone-compatible. (if not, there should be!)

One way or another, though, I suspect there’s a good chance I’ll be an ex-XM subscriber come opening day.

Mel got his way, and kept EchoStar at bay (that unintentionally rhymed). Liberty Media, which owns and operates DirecTV, will invest $530 million in the troubled company in the form of several loans, including $250 million right away. That up front payment will help Sirius XM to pay off the $171.6 million of debt due today.

The rest of the funds would go towards funding the day to day operations of the company. The second phase of the loan would go to pay off debts owed by XM Radio, which has its own set of financial problems.

In return for the much needed infusion of cash, Libery Media would get seats on the board and enough stock to represent a 40% stake in the company. It also means that Karmazin has a much better chance of keeping his job.

“We are pleased to have come to this agreement with Liberty Media, particularly in light of today’s challenging credit markets. Liberty’s investment is an important validation of what SIRIUS XM has already achieved and a vote of confidence in what we will achieve,” he said in a statement announcing the deal.

Harry’s post earlier today regarding the possibility of a bankruptcy filing by satellite provider Sirius XM should come as a shock to no one. In fact, the news reminded me of a story I wrote back in August of last year for BetaNews that essentially warned of significant financial problems for the company.

At the time, Sirius XM CEO Mel Karmazin admitted to reporters that the company was not in the best of financial health — including to Bloomberg TV that same day. Essentially, the company had just taken on unfavorable financing terms for debt, which would put $1 billion in debt repayments due this year.

For almost any company, such a large amount of money would be quite painful to repay. For Sirius XM, it could be deadly. It’s stock price has fallen from about $1.50 at the time of that story to only 6 cents now. Add to this a sagging economy, and apparently slow growth, and the company does not have much money to work with.

The company up until recently had seemed to argue that it was fine and would survive its debt issues. But reality has set in for Sirius XM. It is not in good financial shape at all, and never has been. The chickens have come home to roost, as they say.

Sirius XM’s problems are probably most damaging to Mel Karmazin. Up until Sirius he had great successes in turning businesses profitable. This time, there are just too many problems with the way the satellite radio business has been structured for it to be turned around.

Raising your rates is not going to solve the problem either: if anything, its going to drive folks away. Also with the quality of service dropping — from audio artifacts and cut-outs in the broadcast to questionable programming decisions and service reductions — Sirius XM may have very little time to turn itself around.

What is next? The loss of signature content like Howard Stern or sporting events? More rate hikes? More cuts in programming so that the service sounds even more like FM than it already does lately?

I ask then, what is the point of satellite radio? Might as well go to streaming media via 3G, as Harry has repeatedly suggested.

Could it come down to Sirius being bought out by someone like EchoStar? It may have to: it owes about $575 million in debt repayments to the company, $175 million due next week, and another $400 million due in December.

The Wall Street Journal is reporting that — but it looks like Mr. Karmazin is resisting. Sir, I hate to say it, but you may have no choice, you’ve had your chance. Declaring bankruptcy would open the company up to possible shareholder lawsuits, while a deal with EchoStar may keep the company afloat.

In the meantime, I think for shareholders sake, Sirius XM needs to be honest and forthcoming with us all about its financial health. After the way it handled its channel merge, I just get the feeling that this company either does not understand how, or does not want to communicate with its customers.

Sirius XM, the spawn the of the merger that was supposed to save satellite radio, isn’t doing so hot. According to the New York Times, it’s on the brink of bankruptcy and could file for Chapter 11 protection any moment now. If it does so, service shouldn’t be affected, but those pricey contracts with personalities such as Howard Stern and businesses such as Major League Baseball might be. In other words, the very content that’s supposed to make satellite radio worth the bucks could be at risk.

As I wrote when Sirius XM recently raised some of its fees, I was once a hardcore XM fan, and still find much to like in the service–but I have the sneaking feeling that I’ll eventually do my radio listening in the car via my iPhone or another smartphone. And “eventually” may not be all that far away. Especially if the bankruptcy or further aftershocks from the merger impacts any of the programming I’m paying for. (I still can’t figure out why both the pre-merger XM and Sirius carried Harry Shearer’s Le Show…but the combined enterprise doesn’t.)

Meanwhile, satellite radio’s fragile condition would seem to be more evidence that sending satellites into the skies to beam stuff back to earth is so hugely expensive a proposition that it’s hard to turn it into a business. (Earlier examples: Boeing’s short-lived Connexion airplane broadband and Iridium’s satellite phone service.) Although I guess it’s possible that Sirius XM’s woes have less to do with outer space and more to do with money that stayed right here on earth–and went into the pockets of Howard Stern, Martha Stewart, Oprah, and pals.

Sirius Buzz is reporting that merged satellite-radio monopolist Sirius XM is planning a price hike in March for…its best customers. The cost of getting satellite radio on additional devices beyond the first one you own go will apparently go up by $2 a month; in addition, the streaming Internet service that’s now free will cost $2.99 a month.

When the FCC approved Sirius and XM’s merger last year, it was famously based in part on promises of a three-year price freeze for service. That guarantee apparently applied only to the basic $12.95 a month charge, leaving Sirius XM able to jack up other prices associated with its service. With no direct competitor, there’s less pressure to keep prices low for fear the other guy will undercut them.

Well, maybe. Satellite radio is in dire danger of being rendered irrelevant over the next few years by cell phones that stream a bevy of music, news, and talk stations for no cost beyond standard monthly data fees. Already, my iPhone gets Pandora, Last.FM, Slacker, AOL Radio, NPR, and a whole lot more. The company’s betting that locking up exclusive rights to stuff like Howard Stern and major-league sports will keep its services attractive, but that sounds like an expensive proposition for everybody involved.

News about price changes comes a few months after Sirius XM sprung channel changes on its customers without warning, driving some of its most faithful customers bonkers. (Take a look at the comments on the story Ed Oswald wrote at the time.) I’m still getting used to the combined company’s substitution of something called SIRIUSly Sinatra for the old High Standards station I enjoyed, and really, it’s the prospect of the Red Sox in the spring more than anything else that’s keeping me from defecting to the Internet. And the company’s apparent intention to continue with two separate brands with similar-but-not-identical channel lineups is incredibly kludgy; it leaves DJs having to give two channel numbers each time their identify the station they’re on.

I was hooked on XM for years, and would love to see satellite remain a viable, appealing broadcasting option. But Sirius XM is in a tight spot, and while raising rates may help whip its shaky balance sheet into shape, you’ve gotta think that it’ll prompt some longtime customers–especially those who own iPhones–to dump it.