Sirius Satellite Radio (SIRI) subscriptions are up. XM Satellite Radio (XMSR) subscriptions have increased as well. But here's a statistic pointed out by Marc Gerstein, Reuters' director of investment research: cancellations are also up, and, while still low, are increasing for both satellite digital radio services. Check out his tables which show that XM' s deactivations for Q2 '06 (as percentage of new subscribers) is 57.03%, as compared to the same quarter last year with 31.58%. The total number of deactivations expressed as a percentage of new subscribers for all of 2004 was 27.49%
Sirius Radio subscriber deactivations show a similar trend (by the same measurement) for the past twelve months: 27.71% in Q2 '06 -- versus 15.43% for that quarter last year. The percentage for Q2 '04 was fairly close to 2005's, at 13.73%.
The reasons? One reason that Gerstein suggests for XM might be the recent decision to run commercials on some music stations (the company states that non-commercial alternatives to these particular stations, which are part of a deal with conventional radio giant Clear Channel, remain available). Also XM has licensed some content back to terrestrial radio, such as an FCC-friendlier version of the Opie and Anthony Show, thereby diluting its cache of exclusivity. Both are actions that SIrius's star personality, Howard Stern, has gleefully mocked on his daily subscription-only show. Sirius also runs commercials, though only on its talk stations at this point, with no plans to change, they say. Both services have used commercial-free and exclusive content as selling points extensively in their marketing.
But even this might be something new subscribers are disappointed to discover. The amount of commercials running on subscription radio is nothing like the number that run on terrestrial, but nevertheless I've always found radio commercials especially annoying, and suspect I'm not alone. I can, for instance, recite several poker website commercials by heart after listening to talk stations just a couple hours a day.
I dimly remember when commercials on cable-only television channels were a rarity, but it's not yet clear whether digital radio users will be so accepting, especially when gadgets like iPods provide a huge listener-selected catalogue and portability, as an alternative. That is a good question. Are digital radio services really competing with each other, or with Apple and Zunes?
I do know this, once advertising enters a medium it likes to stay.
Michael Canfield is a private investor, a business and media writer, living in Seattle. His stock portfolio does not include XM or Sirius. He subscribes to Sirius, but not XM.
Reader Comments (Page 1 of 1)
8-05-2006 @ 10:51AM
Matt Anderson said...
Somehow I dounbt that O&A's syndication to terrestrial has had much effect on XM's churn rate. According to XM CEO Hugh Panero, a large number of new subscribers are citing O&A as a reason for signing up. So it would seem that the syndication deal may be gaining more new subs than losing current ones.
8-05-2006 @ 3:41PM
The MediaBlog said...
XM cancellations are up because Clear Channel pulled The Philips Phile off Extreme, Channel 152!
We want Mo!!!
8-05-2006 @ 5:48PM
pete said...
XM is in big trouble. Bad managment. Sirius continues to gain more subs, while losing less. I dumped XM for two Sirius units and couldn't be happier. The best content is on Sirius.
8-05-2006 @ 6:23PM
J. Marino said...
This is stupid.
That idiot expressed "cancellations" as a percentage of "new subscribers". You don't do that -- it it obvious that XM is going to have more "cancellations" when you do that -- it has more subscribers to begin with, so more are going to "cancel" in any given period.
You look at cancellations (churn) as a percentage of the total subscriber base.
The guy at Reuters is a total bozo.
Both companies are losing about the same percentage of their subscriber base each month (around 2%, a little more, all combined). I don't know if it is too high or not -- ultimately, that depends on how many they can add and what it costs to add one.
If you can add subscribers at a cost of 1 cent each, it doesn't really matter if you lose several percent per month; but in the case of Sirius, it cost them well over $200 to add a subscriber, so when they lose one, it hurts A LOT more than for XM, who only spends less than half that much to add a subscriber.
Before we declare XM to be "in trouble" or the industry to crashing, we ought to know a little bit about the subject.
8-05-2006 @ 10:45PM
Steve said...
Understand this Mr. Terrestrial radio man... the more vehicles that come with satellite radio will cause more churn because those people didn't ask for it in the first place.
Satellite radio is amazing.
8-06-2006 @ 7:02AM
Flipao said...
Sounds like something heard Howard Stern thrashing XM in his show and decided to turn it into an article.
"Hoo hoo, XM is in trouble Robin, their cancellation rates are exactly the same ours. Hoo hoo...."
8-06-2006 @ 1:00PM
Roger Reinker said...
The masses are speaking and you will continually see Sirius gaining. There is only one real radio only star and that is Howard Stern. He is a real person with a long term goal that is to bring high quality programming back to radio. His show is funnier than ever and you can tell by listening that he is in this for the long term and has the personality to stay the course. The man is intelligent as heck! That is how he has been able to keep his show fresh for this long and he is only now starting to understand the new possibilities at Sirius and what he can do with these new possibilities. Hey, you country bumkin and crazy ex stock broker, give me a call 408-205-6000
8-06-2006 @ 6:41PM
Ramond said...
This is about programming, plain and simple. Sirius has the superior product.
As for O&A, I belive that Panaro's statement was damage control. Why would anyone buy a service when they can get the same content for free on terristrial radio? And for that matter, why would anyone pay for subpar clones of Howard Stern when they can get the real thing on Sirius?
XM's only winner is MLB.
8-06-2006 @ 6:50PM
Stan Daman said...
Not de pinger. Not de pinger. Yes de pinger. Moi a la moure. Moi a la moure. MOU A LA MOURE!
8-06-2006 @ 10:01PM
Hank Martin said...
I have FOUR XM RADIOS.
Early Adaptor and Loyal. No WAY Howard Stern will Make me Switch. BUT COMMERCIALS WILL. Not having ad spots is the driving reason I buy XM. If they begin ads, I will refuse to pay and they will force me to buy a handful of IPODS or other brand digital music storage device. I like my music commercial free AND with no DJ Chatter. So please leave the talk off the Music stations and keep the commercials on the terrestrial stations. OR Loose a loyal sub.
8-07-2006 @ 2:33PM
Connor said...
You idiots. Stern is a washed up hack who couldn't adapt to terrestrial radio.. he's said so much himself. Howard's show has been the same since the mid 90s... stripper comes in, sits down, Howard says you're hot, you would never date somebody ugly like me, I'll give you some money if you show me your tits... then Schwoogie Robin reads some news... then Howard talks about he invented MTV unplugged then the show is over and then Howard goes on vacation for a month. The Revolution. Yeah right.