Satellite Radio Receiver Sales Plummet

During the holiday rush of December, sales of satellite radio receivers for both XM and Sirius were down 37.5% from the previous year. XM suffered the worst fate, with sales down 41%, while Sirius suffered 36% losses. These are huge numbers. In 2006, sales were down 46%.

Some could argue that more new cars are arriving with satellite radio receivers already built-in, but I would point to the poor programming of the stations, expensive subscription rates and the mass adoption of MP3 use to explain the poor sales.

As a car reviewer, I am often seated in vehicles with satellite radio installed, and I listen to the rock stations. That’s usually a 10-station swath on either service. On those stations, you’ll hear the same popular songs your local FM station is playing. When you switch to “90’s Alternative,” you’ll be greeted by Oasis or Offspring songs — two bands that may have been huge in their time, but don’t have the lasting appeal of, say, U2 or Green Day. My guess would be high royalty rates influence these stations’ song choices, equaling crap hitting your ears.

A merger of the two carriers is still planned, but who knows if demand for even one of them will be high enough to be successful in the future. What do you think? Sound off below.

It's Official: Retail Sales Are in the Toilet (Orbitcast via Jalopnik)  

Comments

Who wrote this drivel? The lasting appeal of U2 or Green Day? Please... FYI Green Day is constantly played on Sirius and I don't think I've ever heard Oasis on any of the channels. And to NOT hear 22 minutes of commercials per hour and listen to Clear Channel's pint sized music library is well worth the $155.00 per year. Much more value than the $588.00 I pay annually for Comcast Cable!!! I have never NOT been able to find something worth listening to on Sirius, but am constantly finding nothing on TV. BUY a radio and subscription first, then listen for a year, THEN comment. A few days in a rental car does not an expert make. If you did a little more homework, you might have noticed the real reason(s) for the sales drops. There have been very few hardware improvements the last year...hmmm maybe the pending (for a year for crying out load) merger? Of course the companies are not going to spend millions in R&D on new radios until the merger is finalized and the new companies direction is known. And potential new customers may not know which service to sign up for with a merger pending. How the heck did you get a column even on this obscure website?

I think the review pretty much nailed it. A couple of years ago, my wife and I got XM for both our cars. FOr the first few months it was great. Then we found that the play lists were as limited as regular radio. About 8 months ago we both stopped listening. Now, we're canceling our subscriptions.

They were almost got another chance. I bought a new car that was sat capable, just plug the XM/Sirius adapter in. Then I found out it was a $500 dealer option. $500 plus a subscription fee to listen to the same old crap day after day. No thanks. I might have sprung $200 for it, but it's not worth more then that.

I have a $100 MP3 player and over 500 CD's. I can listen to what I want anytime with no fee.

Goodbye satellite radio, it was fun while it lasted.

I think the review pretty much nailed it. A couple of years ago, my wife and I got XM for both our cars. FOr the first few months it was great. Then we found that the play lists were as limited as regular radio. About 8 months ago we both stopped listening. Now, we're canceling our subscriptions.

They were almost got another chance. I bought a new car that was sat capable, just plug the XM/Sirius adapter in. Then I found out it was a $500 dealer option. $500 plus a subscription fee to listen to the same old crap day after day. No thanks. I might have sprung $200 for it, but it's not worth more then that.

I have a $100 MP3 player and over 500 CD's. I can listen to what I want anytime with no fee.

Goodbye satellite radio, it was fun while it lasted.

It's particularly disturbing that this is posted on cars.com, blog or not. I guess the author doesn't particularly care about having credibility. Either that or he is getting kickbacks from someone. No one in their right mind who critically compares satellite radio to terrestrial radio would arrive at the conclusions that the author did. The only time I listen to terrestrial radio is to listen to Mike and the Mad Dog. Other than that there is no reason to listen to anything but satellite.

Part of the drop may be due to terrestrial radio's reaction to the competitive pressure: the programming got better ("jack FM" style play lists that are less formulaic and more varied), the commercials (seemed) to get shorter and the marketing was dialed up ("why pay for radio?"-type spots).

Aside from Howard Stern, satellite has few sustainable competitive advantages, and the huge disadvantage of actual cost. They are just going to have to try something new. How about audio broadcasts of network and cable TV shows? While many just wouldn't work, heavily narrated shows would be ideal, and may act as advertising itself for the shows (i.e. 60 minutes, Daily Show, Letterman, Mythbusters, Seconds from Disaster, Lost, etc.)

Why in the world would you think "high royalty rates" influence satcasters' song choices? Royalties for satellite radio are based on a percentage of revenue, and they are the same no matter what music the stations play.

Did you really think the royalty rate was different for different artists and labels? Find out what you're talking about before posting, dude.

I didn't compare it to terrestrial radio.

I think its major competition is from MP3 players.

Tuxcat: so you're saying these radio stations could play any artist they want at the same rate? That would make their programming even worse! Seriously, The Offspring wasn't on radio the first time around as much as they are on satellite. Nor Oasis. They're probably the two I hear most often and am scratching my head. And that's on both XM and Sirius.

Tuxcat: And I did say "My guess" not "The truth and nothing but" please feel free to give us a link saying that radio can play any artist it wants at a flat fee, because if that's true then the programming is seriously, seriously troubled.

Blogging is about collective knowledge so please share some before leveling criticism.

sjones: I believe satellite radio does broadcast classic TV programming like Dragnet. I heard one on Sirius the other day. They also have comedy channels which are pretty entertaining for long drives. I'm speaking more of the music which I think is what a majority of people listen to in their cars.

Talk radio fans will probably want to hear local talk besides the Howard Sterns of the world. And my one favorite show on Sirius is Jason Ellis on Faction. but that's just a few hours in the afternoon.

Would I pay $12/month for that? Nope. I get to listen for free and I usually opt for my MP3 player.

You think XM has poor programming? You're an idiot. For those wishing to learn about new music (new to them, maybe not new to the world) XM is the place to be. From Matt the Cat on the 50s on 5 playing rare, sultry, sexy and surprising R&B from the 1950s to Mike Marrone programming The Loft for music lovers to "read between the lines" of the relationships between songs, XM has Sirius beat. You can't get all that listening to your iPod that you yourself programmed if you're wanting to expand your musical horizons.

And if you chose to listen to "90s alternative" why are you bitching about Oasis & The Offspring? You're listening to 90s alternative, dude. Not "Artists Popular in the 90s But Whose Relevancy Has Waned in the Ensueing Decade."

Closed-minded fool.

Whether or not you like the programming on sat is purely subjective. Everyone I know who has sat radios, and I know quite a few, will not waste their time anymore listening to terrestrial radio because the commercials are annoying and the plethora of music available on sat is way better than anything available on regular radio. There's many times when listening to regular radio where I can flip through all the stations and not find anything worth listening to. That doesn't ever happen with satellite radio for me.

Actually the programming problem is that those artists hit all three alt-rock stations or four or whatever not just the 90s one! On the current alt-rock you'll hear the exact same songs as you do on local alt-rock radio repeated all the time. Other folks here are backing me up on that.

To reiterate: I'm not in a rental. I test a new car every week for Cars.com and MOST of them have satellite in them.

As far as I'm concerned you're way off. When I go from my car w/ SIRIUS to my wifes car w/ cd & fm I feel the void "bigtime". My 18yr old son will actually ask to drive my van over his sporty passat because of (you guessed it!) Sirius. You got this one totaly wrong, sorry!

Neal,
Thanks for the actual real life example of why folks like it!

Now here's a question I'd have to ask you: why didn't you get your wife one of the aftermarket players for her car?

Maybe that would help explain the point of the original post on why those sales are so far down the toilet.

Well broaden your alternative horizons, man. There are alternatives to alternative. XM has a channel called Deep Tracks, devoted to playing un-singles from great albums. Check it out sometime.

XM Fan: I think part of my problem is I'm a music nerd so I have a huge collection of music which I've got about 1/3rd of on Hard drive/portable so far. So Every week I've got like 6,000 pretty good songs (album cuts etc) I dump onto my mp3 player to go through. Plus in Chicago (tall buildings, parking garages) the signal doesn't go out and even MP3s have a better sound quality when going through a USB connection in a test car (not an Aux input) then satellite.

Compared to FM though obviously satellite has strong points. I only listen to Jack FM or WXRT here in Chicago which play a variety of very retro or eclectic stuff respectively.

Satellite readio is well worth the money if I don't have to listen to advertisements for car dealerships or the nonstop traffic reports. There is a Toyota dealership in Houston that has plugs in at the end of a song. I don't even have time to change the station before the advertisement plug is played. It is VERY annoying. I won't buy from dealerships with obnoxious advertisements.

Wow. It's a good thing we don't have Asian satellite and US satellite radios. Then we'd really have an argument going.

The key point made here is retail sales. Sirius' subscriber base grew by an impressive 38% in 2007! I guess this was due to great programming, cheap subscription rates, and people finding the service to be better than the mp3 download format. Give me a break.

I'm someone who could potentially like satellite radio because I have eclectic tastes for esoteric content, but I can't possibly justify the price. I'll admit I'm cheap, but I have several podcasts delivering me new material, downloaded automatically everyday, and it's all free. Why in the world would I pay $150/year for what I can get for free.

What exclusive content is there on satellite radio: Howard Stern? I'd pay $150 a year NOT to listen to Howard Stern.

I think the market is simply saturated. I haven't heard of anyone who felt they needed to upgrade their satellite radio receiver. It's not like the people who compulsively buy a new iPod whenever an upgraded model comes out.

I actually agree with the author, somewhat anyways. To get Satellite radio, I have to invest in the equipment, have it installed or install it myself, and then I have to pay $12/month to listen to it -- what a headache!!! My wife really wants satellite radio, but the cost is prohibitive at this point, especially when regular radio is free. So we spend a less on intunes and just buy the songs we actually want to listen to.

Dan Stokes: I think we all know why Sirius is the one gaining so many members. Howard Stern.

XM could only keep 2/3rds of its new subscribers for 2007. Car companies are spending $100 per subscriber to underwrite XM.

I think Sirius will do fine or a merged company. Especially now that Sirius is branching out to useful services like gas, food, movie times etc with a new system from Ford that will surely move to other carmakers.

BUT! Will it be enough to beat the advancement in mobile tech? Soon a good smart phone with bluetooth will be able to synch up to your car and do all that stuff anyway. And read you your stock quotes etc. Maybe you can get Internet radio on your phone in a year or two? Who knows.

I've had Sirius for as long as Stern has been on it and as far I am concerned, thats enough for $12.95 a year.

When they offer alacarte programming, I may take advantage of it as there are a bunch of channels I just don't use.

BUT, I still get to listen to stuff that you simply cannot find on the radio and absolutely have to pay for otherwise. The Electronica, Jazz and Blues come to mind.

Sure, if all you are looking for is classic rock or top 40 stuff, there is plenty terrestrial radio for that (if you can stand the commericials, which I can't.) But you just can't touch the amount and variance of programming available.

I bought a receiver that I had to take the time to install in my car itself. It was a pain, but I'm more of an advanced techo-junkie who loves taking things apart. I could see that being a pain for most.

One thing is for sure. My next car, which will be bought sometime in the next few months (probably an A4), absolutely must have Sirius built-in and integrated into the head unit! I want a clean look.

Good point about the internet radio. But how do you get internet radio? Through satellites, no? Maybe Sirius could offer head units that give people the ability to listen from a URL, in order to stay competitive.

I work with people that have satellite radio in their car and listen to it here at work. The swear it's the greatest thing and won't listen to anything else. I can't see paying for it. I choose to listen to my iPod where I can select any song or artist that I'm in the mood for.

Adrock,
I have internet access on my phone. I would guess I could even listen to internet radio through that now?

Like cable TV in its beginnings, satellite radio started out promising that for $12 per month you would never have to listen to commercials. Now that they've begun sneaking spots into various channels, people are staying away. Maybe the old bait and switch isn't going over so well with the public this time.

Gee, you must live on the east coast or in a big city. Try being in Bugtussle and see how the programing is. Or better yet, drive across Montana. You will finally understand why so many people prefer a paid service for music. I did change from XM to Sirius and must say I prefer the latter.

I am extremely disappointed with Satellite Radio. After listening to (fixed) satellite radio in a retail store I thought it was great. Then I purchased an XM radio. The sound quality was below FM quality, and there were commercials on every channel (DJ’s and constantly being reminded of what station you are listening to should be considered commercials.). Will we ever have access to “just music” satellite radio? Probably not.

Wow DaveT. I gotta throw a flag on the play. When I lived in NYC there was a large variety of types of music on the FM dial (and probably most major markets as well) But since I moved out to Pennsylvania there seems to be 60% rock, 20% country, with the rest divided between Spanish and Chistian music. Sometimes I can catch a distant station (Philly or Baltimore) that has Urban music, but mostly it's more (bad) rap than R&B.

I miss smooth Jazz and "REAL" R&B. Some 70's funk wouldn't be so bad on occasion, and lately I've developed a taste for big band swing. But I'm too poor for XM (or a new car for that matter), so I just bought an MP3 Player and download off the net.

So it looks like SAT radio is mostly a luxury for most at the moment?

I love the comment, I have to buy an after market radio, install it, what a pain, yadayadayada... How lame....

Yeah, I'ed much rather fool around with carrying my mp3 player around, researching music online, keeping things sync'ed, creating playlists, etc... yeah, that's easy and practical....

Sorry folks, at 12.99 per month, I think I could lose the headache of fooling around with my ipod (yeah I got one, and it's full..) and doing internet resaerch, creating playlists, etc.. just to have variety in the car....

For real music lovers, I think the advantage is being overlooked... with satelite, you enjoy the opportunity to expose yourself to all kinds of different music (easily), and it's very easy... Mark the tracks you hear on the road, and get them on your ipod later... What else is there to do in the car???

Variety is the spice of satellite, why listen to the same stuff you've listened to for the last X years every day....??? And if you actually have the time to manage your collection and playlists, then hats off!! I choose the easy way out :)

For me, 12.99/mo (about 2 hrs work for the lowest of earners these days) is well worth it for this music enthusiast... I'ed spend more time trying to manage good playlists and remembering to tote my ipod around..