Will Podcasting Kill Satellite Radio?

Aug 8th, 2006 | By | Category: Audio Podcasting, General

iPod BonoPodcasting is increasingly a threat to the survival of satellite radio providers Sirius and XM. Both companies have faced increasing losses, even as their subscriber bases have grown.Sirius lost $237.8 million for the period compared with a loss of $177.6 million during second quarter of 2005. XM Satellite Radio on July 27 reported a second-quarter loss of $231.7 million, up from losses of $148.8 million a year ago.

Apple recently announced that more than 70 percent of 2007 cars will have iPod support, which will make it easier for people to listen to podcasts as they drive. This threatens Sirius and XM, though, because adoption of satellite radio has largely been through people who buy cars with factory-installed equipment.

According to Carl Bayard, an analyst at Desjardins Securities in Toronto who tracks the satellite radio business, the development of “seamless” integration of the popular portable iPod device and car stereos is “a major negative blow for the entire satellite radio industry.”
In February, Mr. Bayard highlighted the iPod as the “most worrisome” substitute to satellite radio because, he says, “it offers users better control over music selection.”

Subscription fees for satellite radio basic service are about $150/year for one receiver, about the same as it costs to buy an iPod nano.

Other reasons podcasting threatens satellite radio:

  • For many listeners, podcasting offers a broader variety of content than is available over satellite
  • Podcasting captures an attractive demographic for advertisers
  • Podcasting reaches an audience that, depending on estimates, is comparable in size to satellite radio or larger.
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