How Many Subscribers Will Sirius XM Lose?

Most of you think that I'm crazy. You don't believe that President Obama's plan to give all citizens broadband access will mean much for Sirius XM (Nasdaq: SIRI  ) .

You may be right. Yet, last week, the satellite-radio superstar followed a mostly good earnings report by refusing to provide guidance on its first-quarter subscriber targets. Bad idea.

"Just say it, Sirius XM. You certainly won't be the only company to lose net subscribers this month," my friend Rick Munarriz wrote last week. "Mr. Market's giving everyone a mulligan. I'm not the only one who saw this coming, so just rip off the Band-Aid and come clean."

But it isn't. Not yet, at least. So I decided to ask customers. Are they dumping Sirius XM? And, if so, is it because Web radio is a viable alternative?

Web radio gets an ounce of interstellar flesh
Responses were mixed. Most who said they're leaving enjoy the content but they either (a) don't see enough of a difference with what they can get via Web stations such as Pandora or CBS (NYSE: CBS  ) unit Last.fm or (b) are turned off by Sirius XM's plan to charge more for streamed content.

"When my XM subscription came up for renewal in December, I called to cancel it because I found Pandora to be a better service -- it's free and I can create my own custom stations," reader Mandy Porta wrote.

More incriminating, Porta says, was XM's begging. "XM made me an offer to renew my subscription at half price, but I still rejected the offer. Then, the representative told me that I could keep the service for a few more months at no cost, and if I started using my XM more and found that I liked it, I could renew then. Sounds to me like Sirius XM is struggling to keep its customers. How can they compete with custom, free radio?"

Fair point. Google (Nasdaq: GOOG  ) allows YouTube users to create playlists of their favorite music videos and is experimenting with selling select tracks through Apple's (Nasdaq: AAPL  ) iTunes and Amazon's (Nasdaq: AMZN  ) digital music store.

What's more, according to press reports, Vivendi's Universal Music is in discussions with YouTube to create a music-sharing site that would further crowd an already crowded market. Why stream Sirius when so many other options exist?

"We are canceling Sirius. Was considering doing that, then they started this new thing of charging extra to get the web feed (which is already very limited selection)," wrote reader Glenn Phillips. "Now granted, they would grandfather me in without the extra [charge] ... For now. I don't think that will be the case long term and I just don't want to have to keep up. I listen [to] CD, iTunes downloads, and Web radio more anyway."

Like Rick, I can't blame Sirius XM for charging more for premium service. What's troubling is that some users don't see the value in these (ahem) value-added services, and are canceling their subscriptions as a result.

Back away from that receiver, Fool
Others responded with the fervor of a National Rifle Association rally. "I'll stick with my XM radio until they bury me with my earbuds in my cold, dead ears," wrote reader Janet Groene, who edits a blog about traveling via RV. "Home is where I park it. Aim the antenna and I have music, comedy, news, and old-time radio no matter where I am."

Still others say that Web radio, while neat, is insufficient for on-the-go consumers who listen in the car. Or, better still, in the air.

"I'm a dedicated XM subscriber and am not planning to leave for broadband radio. My basic reason is that of access -- I use my satellite radio when I'm flying my 4-seat airplane," wrote reader Michael Roth. "The satellite service not only streams music for me and my passengers, but also broadcasts critical weather and flight safety data to my GPS. At this point, there is no other way to get all this information in the cockpit."

Nor in the driver's seat. Automakers such as Ford (NYSE: F  ) and General Motors (NYSE: GM  ) remain the largest distributors of satellite radio receivers. Roughly 44% of those who try satrad after buying a vehicle choose to stick with the service.

And let's not forget that, in the past, regulators have sided with the recording industry in imposing higher royalty rates on Pandora and its peers. For a time, it seemed that Internet radio was doomed. It still could be; Web stations have yet to forge an agreement with artists and their representatives.

So while it seems clear that Sirius XM is bleeding subscribers now, a beleaguered Web radio industry isn't yet ready to fill the void. Not all of it, anyway.

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Tim had stock and options position in Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy needs its daily dose of Social D.


Read/Post Comments (23) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 16, 2009, at 3:14 PM, ooooo5 wrote:

    What's your problem? Do you think that people can snap their fingers and get the kind of content that sirius xm has? I wish someone would be honest on why they wish to drag any company in the mud , let alone sirius, during this trying economic time. Are you so naive to think that sirius doesn't have something on the horizon to ensure a competitive future? Or do you just think that the real business people that have worked in the business for years are just sitting around with their thumbs you know where?

    Please!!!!!

  • Report this Comment On March 16, 2009, at 3:17 PM, mattday wrote:

    You just cant stand it can you? Siri adds 85k subs in Q4 and somehow thats not good enough...have to bash the stock and company...always. whos paying you to write this garbage?? NAB?? One of the ONLY subscription companies in the world with growth last year and you find some reason to be negative!! JACK OFF

  • Report this Comment On March 16, 2009, at 3:27 PM, wtfdidyousay wrote:

    tim - you simply don't get it, do you? CONTENT CONTENT CONTENT. that is what its about. internet can't afford to provide comparable content and WON'T BE ABLE TO. it is a non issue. give it a rest, genius.

  • Report this Comment On March 16, 2009, at 3:29 PM, crafal wrote:

    How many subscribers will FOOL loose by writing dumb a** articles every 5 minutes!! on every stock that is popular. One is good, one is bad. These people need to find another job. Who are the people who keep this site in business???????????????

  • Report this Comment On March 16, 2009, at 3:50 PM, beeeel wrote:

    I just renewed my three radios. My main one I opted for the LIFETIME sub. and the other two for 3yrs. I believe its the best value out there for the range of music I enjoy depending on my mood at the time. I've enjoyed XM for 6-7 years and I BELIEVE it will recover threw these hard times. Free downloads wont last so I locked in at a low rate.

  • Report this Comment On March 16, 2009, at 4:05 PM, m55555 wrote:

    I HOPE THEY LOOSE YOU

  • Report this Comment On March 16, 2009, at 4:39 PM, Sirxm wrote:

    I agree with the crafel comment. We don't need to hear

    consistent negative reports including those from the Fools

    and of course the former SIRIUS CEO founder too she put that company in Chapter 11 four years after she founded it.

  • Report this Comment On March 16, 2009, at 4:58 PM, Roulette1664 wrote:

    When are the pundits going to stop barking up this internet radio tree? It just reveals that they're all idiot blowhards without a clue.

    75% of SIRIUS' business is from the auto market - when Obama gives us broadband in our cars, then we will start worrying. Until then, SIRIUS has a good product and the vast majority of their users aren't thinking of ditching it - because there's no viable auto-based alternative.

    The Motley Fool lives up to his name - his posts are increasingly big of speculation and short on research.

  • Report this Comment On March 16, 2009, at 5:01 PM, rollzone wrote:

    hello. as a professional driver satellite radio was the answer to station drop-off. for my octogeneric parents it was an easy way to listen to their forties music. the commercial time irritates me, and i regret the company is trying to make up so much cost from putting up satellites; in so little time: instead of waiting for their market to expand. i withheld investing further with subscriptions, until news about the possible bankruptcy had been resolved last month. now that the customers know they have investors willing to believe in their future, i look forward to listening from the dark side of the moon.

  • Report this Comment On March 16, 2009, at 5:24 PM, Cool700 wrote:

    How about writing how Clear Channel was given a bad credit rating or how many have lost their jobs at Clear Channel. How about why CBS dropped some radio shows. How about some negative stories about NAB radio and what SIRIUS XM is doing to them as SIRIUS XM aproaches profitability.

    SIRIUS XM will be on ipod's and iphones and are on the Blackberry and AT&T phones already.

    Write about the Churn rate of how many NAB radios are crushed in the scrap yard. Write about that.

  • Report this Comment On March 16, 2009, at 6:39 PM, KHipp wrote:

    I must agree, that it is beginning to look suspicious on how much negative editorials Motley Fool puts out about SIRI.

    Also, Content is king!

    The ONLY level Internet radio can compete on is Nation Wide Broadcasting. Thats it.

    Other then that, Internet Radio will be EXACTLY like terrestrial radio. Full of commercials, and will be governed by the FCC.

    YES it will be governed by the FCC.

    Sirius will be around a very long time.

    To the shareholders: Just hang in there. This is a long term stock (the way its supposed to be)

  • Report this Comment On March 16, 2009, at 7:14 PM, draland wrote:

    Can't wait for Kaz to 'Kramm' it down everyone’s throat's who doubted, but more importantly, tried to harm 'us'..................it is obvious that he is playing the contrarian point of view......and it would not surprise me that while he 'played possum' and ceased all guidance...........the numbers will be actually better...........catching even more naysayers and shorts w/their pants down!!!

  • Report this Comment On March 16, 2009, at 8:13 PM, TXGUY76 wrote:

    My job requires me to spend a lot of time on the road; in and out of the car all day....I listen to my Sirius radio constantly throughout the day....listen to CNBC and ESPN radio, Bloomberg also; just like I was at home on the couch with the TV....It was the best christmas gift I've gotten...

    Subscriber growth is going to be slow given the economy....kinda goes without saying; especially with how new car sales have been (but thanks for stating the obvious) Expenses have been reduced since the merger; and it is hard to ignore 19 Million subscribers in total.....they definitely have a long road ahead; but the Liberty deal has bought them some time to realize what their potential may be

  • Report this Comment On March 16, 2009, at 8:24 PM, J56D wrote:

    How Many Subscribers Will THE MANGEY FOOL Lose?

    Especially with the lack of any original content!!!

    How about posting your subscription numbers.

  • Report this Comment On March 16, 2009, at 11:48 PM, lapinebob wrote:

    I live in a rural area, I do have broadband but I have better things to do than sit in front of a computer. We have 1 AM and a dozen or so FM stations so SiriusXM is a blessing. I listen in my truck, shop, and when we're RVing in fly over country. I,m so happy with it I bought 10,000 shares. When I do take time to sit in front my of computer I enjoy Pandora also. They both have their place.

  • Report this Comment On March 17, 2009, at 1:33 AM, lucyspanda wrote:

    I do not read anything cramer has to say anymore because I believe his statements are misleading because they are self serving. I am getting to that point with the fools. There are many good reasons to subscribe to sirus/xm and to own stock in the company. It would be refreshing if you would take some time to stop bashing the company and take a more open approach to the pros and cons of the company, it's subscribers and it's shareholders. When it comes to value for the dollar spent, sirus/xm is a great, cheap, date.

  • Report this Comment On March 17, 2009, at 2:12 AM, ActionBastard wrote:

    Competition from Web Radio? Am I on Fool.com or on some blog? Web Radio isn't coming into the auto - the bread and butter of Satellite radio, it isn't a near substitute for the bulk of their subscribers. So while Sirius XM may go away because they are losing manner that would make AIG executives blush, web radio isn't going to be the thing to put them under - at least not until there are enough competent solutions for web radio that can run on a smart phone plugged into a cars receiver.

  • Report this Comment On March 17, 2009, at 3:09 AM, ThongLover wrote:

    Phuck This!! I'm so sick of you AshWholes baggin on Sirius. I just drove from Kansas City to Denver...ready to enjoy a week of Vail skiing...

    I enjoyed Sirius the entire trip...as did my passengers. I go out and enjoy a meal and some local "entertainment"...come back, check the number and see a healthy POP up to .24 for Siri.

    Then i read the bullsheet. You are morons. I'm done reading your dribbling babble. Sirius is an excellent service and all you do is piss all over it.

    Grow a pair.

  • Report this Comment On March 17, 2009, at 1:09 PM, stockdoc111 wrote:

    i'm not doggin' sirius stock, i own it.

    for those of you who talk about car options.....i have pandora on my iphone and iphone plugs into car auxillary....therefore letting me listen to pandora in my car.

  • Report this Comment On March 17, 2009, at 1:19 PM, mikecart1 wrote:

    Most unbiased comment on here:

    I don't have a Sirius radio and never had one. However, a lot of people do and more and more plan to. It seems like this site has a "Let's Hate SIRI' article every week. I'm just tired of SIRI constantly being discussed and how every article is about how they are terrible. Their stock is near $0.30 today BTW from $0.05 not too long ago.

    Good investment? Survey Says YES

    Motley Fool correct? Survey Says NO

    :D

  • Report this Comment On March 21, 2009, at 4:35 PM, bonniebam wrote:

    I just renewed my Sirius Radio Subscription that came with my car i purchased last year. Before that I had XM. I totally love subscription radio and there is nothing on the horizion that I see for my car to replace that. Yes I have an I Pod, I phone etc but I have the feature in my Sirius that feeds into my DVD player for my kids to watch 3 cartoon channels while we drive. Plus I get Blue Collar Radio, news channels and a whole lot of other channels and music that I just love depending on the mood I am in. The price increase was minimal and it is well worth it while I sit in traffic and can have my kids watch cartoons in the back while I am listening to blue collar radio without worrying about them hearing stuff they shouldn't!

    Sirrius isn't going anywhere. I just installed this Pandora on my computer and it stinks! Internet radio isn't going anywhere. That saying, you get what you pay for does mean something.

    Sirrius just needs to hold on and get people to invest in it and recorrect their debt stuff...it will happen, there isn't any alternative and they have subscribers, and we are powerful, unlike internet, we are paying.

    I am not disprespecting Motley Fool, love you guys too, just don't discount us people that are paying for it and believe in Sirrius, I purchased their stock to tell them I believe in them and want them to continue.

    :-)

  • Report this Comment On May 28, 2009, at 9:31 AM, wolfwuf wrote:

    I'm retired and of course budget bound....I gave up dish tv but went to Sirius. The problem for me was getting the info to buy in a way I could understand. So it took seven frustrating telephone calls till I got someone who could help me. I think their lack of marketing and web site deficiencies are a factor in slow subscriptions because it is Its certainly cheaper listening to Sirius that listening to TV. Itseems to me that the comparisons to Pandora et al relate mainly to music and Sirius offers so much more.

    J

  • Report this Comment On August 18, 2009, at 7:07 PM, vince600 wrote:

    09-F-150

    I just bought my 09 F-150 in April and of course it comes with 6 months of sirius. I did not know that on the first of July they changed their life time membership and did away with it all together. I was not notified of this change, and when I got their letter on the 7th of Aug of the new changes and new prices I was outraged. I'm retiring from the Navy in three months and this truck was part of my retirment. The life time being 549.00, and now for 3 years it's 464.89, now who ripping off who here. I don't think I'll be staying with Sirius for much longer, I'm sure their prices will keep going up and up and up. So bye bye;;

    Big Ford

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