Apple Comes to Sirius XM's Rescue

The highly anticipated Sirius XM Radio (Nasdaq: SIRI  ) streaming program for Apple's (Nasdaq: AAPL  ) App Store is finally coming.

In news broken by unofficial Apple blog TUAW last night, Sirius XM has been sending out emails to satellite radio fans who have requested information on the upcoming application. The missive claims that the official Sirius XM program for iPhone and Wi-Fi-tethered iPod touch owners will be available tomorrow.

Not so fast, though.

The program won't be freely available for most of Sirius XM's 18.6 million subscribers. Streaming through Apple's devices will be limited to premium Sirius or XM Internet radio subscribers. Those are the accounts without satellite receivers who pay $12.95 a month for Web-only access or satellite subscribers who pay an additional $2.99 a month for premium online playback.

Sirius XM could have taken a page out of the Netflix (Nasdaq: NFLX  ) playbook, offering its streaming service as a retention bonus for active subscribers. Instead, it's approaching this week's dive into the App Store as a new revenue stream.

This is what makes Sirius XM's foray so important. If it's a winner, it will create a ton of incremental, high-margin revenue for a company that is already in the process of improving its cash flow.

I'm still not convinced. $13 a month may not seem like much, but this is still an inferior product to the similarly priced satellite-beamed product. Due to licensing restrictions, live sporting event broadcasts and some news and entertainment channels are not available online. The App Store program will also hopefully overcome one of the streaming service's biggest quirks: the need to physically confirm that you are listening every 90 minutes or it shuts off.

The $3 a month deal for existing subscribers is an easier sell, but is it worth it? If they are already paying nearly $13 a month for satellite service, it probably means they spend plenty of time with access to satellite receivers that don't require any prolonged buffering between channel changes. Paying for a service implies active usage, and it remains to be seen how quickly this will drain the battery life.

Unfortunately for Sirius XM, the App Store is loaded with free alternatives. Some of the more popular music-related Web radio apps include Slacker, Pandora Radio, and CBS' (NYSE: CBS  ) Last.fm, with customized playlists based on listener preferences. There are also Internet radio giants like Yahoo!'s (Nasdaq: YHOO  ) Y! Music, Time Warner's (NYSE: TWX  ) AOL Music, and even terrestrial radio's Clear Channel, with free ad-supported access to a wide range of genre-specific stations.

They obviously don't have Sirius XM magnets like Howard Stern and Oprah Winfrey on board, but will that be enough to distance the product from the growing realm of free radio?

The answer to that final question will be the difference between shares of Sirius XM ascending further on the back of head-turning financial improvement or languishing as the company sifts for a new catalyst.

What do you think? Will the Apple App Store be a hit or has Sirius XM priced itself out of the market? Post your thoughts in the comment box below.

Other ways to slice and dice satrad fandom:

Apple and Netflix are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story, save for Netflix. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (32) | Recommend This Article (26)

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 June 17, 2009, at 12:09 PM, SiriFool wrote:

    This wouldn't be a Motley Fool's article without the negative twist... that being said, SIRI is on their way to the top. People who own SIRI and use SIRI are hooked like addicts and will not cancel over a few dollars that will insure profit to the company and keep their favorites on air. SIRI is content based. The others are not. SIRI is now available in the Camry, only the highest selling American car- the report just came out. I sold a bunch of my shares then re-bought this morning. Sooner or later the shareholders will see a substantial return for their dollar- don't lose out! :) SIRI is here to stay!!!

  • Report this Comment On June 17, 2009, at 12:23 PM, JRSmithman wrote:

    he is forgetting another detail of course that would be benificial to the Apps for all Premium users as well. Basically they would not be paying anything extra unless they were only basic users for Sirius/XM

    All Premium SIRIUS Internet Radio subscribers will be able to download the application from the Apple iTunes App-Store for free on their device and access the service at no additional cost! Subscribers who are listening to the Basic Online Service for free must first upgrade to the Premium Online Service for $2.99 per month to access the application on the iPhone or iPod Touch.

  • Report this Comment On June 17, 2009, at 12:40 PM, TMFBreakerRick wrote:

    JRSmith, I did mention that in the fourth paragraph of the article:

    "The program won't be freely available for most of Sirius XM's 18.6 million subscribers. Streaming through Apple's devices will be limited to premium Sirius or XM Internet radio subscribers. Those are the accounts without satellite receivers who pay $12.95 a month for Web-only access or satellite subscribers who pay an additional $2.99 a month for premium online playback."

  • Report this Comment On June 17, 2009, at 12:41 PM, mogrifier wrote:

    Don't view everything as fixed. Service prices change, as well as content offerings, so viewing this offering through a static lens is a mistake. There are millions of iPhones not in the US and therefore the user does not have satellite service available. This will be a great (and only) way to expand the service to more markets through a device they carry with them all the time. Just think about it. China, an iPhone, and Sirius? What penetration rate do you need for big success?

  • Report this Comment On June 17, 2009, at 12:57 PM, sourbear wrote:

    "news broken by unofficial Apple blog TUAW last night" is a lie too since many of us have been reading about this for a couple of days now and I first saw the email from SIRI customer service over on satwaves.

  • Report this Comment On June 17, 2009, at 12:58 PM, sourbear wrote:

    err, I first saw the email from SIRI customer service over on satwaves 2 days ago.

  • Report this Comment On June 17, 2009, at 1:03 PM, DMGambone wrote:

    There is a group of people who would benefit from this and that is the group of people who own a regular subscription to Sirius and would listen to it at work, but are currently blocked from doing so. Many companies, in an effort to cut down network usage, block sites like YouTube, Sirius XM, and other streaming sites that take up a large amount of bandwidth.

    Another group is the group who would like to listen to it at home (i.e. have a stereo with the iPhone attachment or an iPhone docking station with speakers), but don't want to spend for the additional costs of getting the home kit and subscription.

    With it now available on their iPhones, they can all listen to Sirius and while charging their iPhones. All for $3 more.

    Although, I doubt that this will bring in many more subscribers. Most people utilizing this would be those who already have the satellite subscription and can afford the extra $36 a year cost. $36 a year is CHEAP.

  • Report this Comment On June 17, 2009, at 1:06 PM, ibtd4 wrote:

    I'm calling this one another miss for Sirius. Besides the fact that there are other free applications. The $3 a month for internet listening is a 2009 price increase already as this used to be included with a subscription. Add to that another $2 a month price increase scheduled for next month, then $3 for the Iphone access and all of a sudden you're up to $21 a month. With the economy in the shape it's in this is not the time to be hitting consumers with a price increase every couple months for a non-essential entertainment subscription. Sirius management has once again proven that they are totally out of touch with the realities around them. They'll be lucky to recover their development costs.

  • Report this Comment On June 17, 2009, at 1:14 PM, siriradio wrote:

    Siri is UP ...I love it !!!!!!!!!!

    motley is a joke ...new blog for traders is coming .. time to dump this blog soon.

  • Report this Comment On June 17, 2009, at 1:17 PM, karaokejb wrote:

    Bear Views on beaten stock are a dime a dozen. Try reporting on a current bear stock calling it out as a bull. People love contraversy, and this is what MF caters towards. Wether the app works the first time is unimportant. iPhone is one of the hotter tech items right now. Being associated with an "IN" item is great advertising. After all, Sirius got MF to write an article about it!!!

  • Report this Comment On June 17, 2009, at 1:23 PM, schwarzwaldmaede wrote:

    When I came to this country 10 y. ago, from Germany

    one thing was different, the positive attitude, to live a good life by spending your money instead of putting it in a savings account, look at a glass as half full instead of half empty, driving a nice car instead of a shoebox, live in a big house and not in a tiny appartm.

    I guess you get the picture. Americans still drive bigger cars, live in nice big houses, spend hundreds of dollars every month for phones,cable etc. , not to mention the huge amounts waste on utilities bills, by running the a/c while at work or the sprinkler during a rain shower. But all of the sudden, TMF and the rest of the country found the real culprit, SIRIUS. By cancelling your sub you will become debt free in a blink of an eye, you will become a billionaire. Hey that's great, these guys at TMF are geniusses, don't care about your mortgage, your job, your utilities, your cells,the gas pump, it's all about SIRIUS.

    I got it, I will cancel immediately and buy myself a vaccation home or a gas guzzler or even better I spend hundreds of dollars and subscribe to someone who offers financial advice, so I will get broke faster.

  • Report this Comment On June 17, 2009, at 1:26 PM, rhalracing wrote:

    The only people who bash sirius are those that don't subscribe. I WILL NEVER GO BACK TO REGULAR RADIO. I am already a life time premium member so it doesn't affect me, but if I wasn't I assure you I would pony up the 3.00 without batting an eye. And NO free service compares. Period.

  • Report this Comment On June 17, 2009, at 1:32 PM, ibtd4 wrote:

    As I'm sure you're aware, most of the positive views on the Iphone application and dreams of success are posted by what is affectionately known as "siriots," the SiriusXM stockholders Mel Karmazin charitably referred to as "unsophisticated." Regardless of what they've talked each other into believing the Iphone app is no big deal. It won't save Sirius any more than Howard Stern or the merger did. It's an appealing product but an appealing product will never be good enough to overcome a failed business plan and incompetent management.

  • Report this Comment On June 17, 2009, at 2:08 PM, ThirdWheelNeil wrote:

    Call me a man of proven premonitions but I have been right all along about SIRIUS. In the time I have owned it my profits have paid off all of my recording studio time, which can be very expensive, and still left me more for future investing. It's a great stock mainly because of the satelite aspect which will be required in larger part in the future. Music, the need to be informed and entertained, and the fact that too many people are invested in it will prevent the stock from going under are just a few reasons to own SIRIUS. This stock has a future that in the long run will continue to climb. I can FEEL it!!!

  • Report this Comment On June 17, 2009, at 2:20 PM, Konstanu wrote:

    Motley Fool is a joke, Wall Street is a scam and Sirius is a 30 cent stock. When is it going to be delisted already? Is this company really worth writing about? It's an almost entirely irrelevant entity. A business model is not a good one if the business loses billions every year in its 19 years of operation. That is what Sirius has been doing.

  • Report this Comment On June 17, 2009, at 2:24 PM, plange01 wrote:

    this is not going to help siris stay out of bankruptcy...

  • Report this Comment On June 17, 2009, at 2:25 PM, dlev62 wrote:

    rick obviously is selling SIRI short and has been for so long......what he and cramer have agins this co mpany i have know idea.

    they have a GREAT product..EVERYONE who owns it loves it..they have nearing 20 million subscribers...celebrity and sport affiliations....not to netio0n now APPLE and when the auto indutry begins selling new cars again we will see another boom....

    this is high flier...DO NOT SELL...you are insane if you do..at these levels,,,buy buy buy

  • Report this Comment On June 17, 2009, at 2:34 PM, cantbefoolish wrote:

    "Not so fast". Gee, what a surprise, more bait and switch writing from Rick.

    Why don't we do some comparisons instead, for a change? Here goes.... Last quarter SIRI lost around $50 million, on $600 mil in revenue. Okay, FNM lost around $23 billion (not million) and what is their stock price? BAC lost over $30 billion and how much are their shares? I'm pretty sure GM also lost a lot more than SIRI, too. Shall I continue? PEIX filed for bankruptcy and that company trades higher than SIRI. How about DNDN? They haven't made a profit, either, and their shares are trading over $25, just based on speculation about positive drug results. But do they don't have anywhere near the revenue of SIRI. That revenue will most likely increase with the iphone app. and Camry subs. So, how about writing about how cheap SIRI is, relative these other companies, who are in much worse shape.

  • Report this Comment On June 17, 2009, at 3:55 PM, trammen0 wrote:

    Hey don't forget Pandora and others soon will pay Royalties inwhich Sirius already pays right??? Then do you think they can survive then I bet not.. Hey keep bashing and acting like FOOLS.....

  • Report this Comment On June 17, 2009, at 6:44 PM, gettingit wrote:

    I happen to like Rick's views, as investors it's important to look at all sides. The functionality of this product will likely dictate it's success but I think that this is just one small piece. Subscriptions are off year over year and they have lost some subscribers. I am in the hotel business and most hotel companies are off 25-30% in revenues YOY-many other businesses are in this range, so for us to see significant growth toward the bottom line is encourgaing. There could not be a worse time for Sirius to exist with all the apoocolyptic events in their core competency-auto sales! They just announced the deal with Toyota which is more important than the I-phone for the short term success of Sirius-read the below

    :Every Toyota and Lexus vehicle equipped with factory-installed XM comes with a minimum three-month trial subscription to the available XM services on new vehicle purchases. After trial periods, an XM subscription is required on all Lexus and Toyota vehicles.

    Am I reading this right-when it says "required". This demonstrates long term confidence from the Japenese co.who is highly conservative. I bet you will see a similar announcement from Ford and GM. Also the royaltyy fees will give a pop to the topline as will the conversion of 750,000 users to the premium channels which happened after a two week campaign.

    So this is what I view as critical and finally...it's all about CONTENT-you can't get it anywhere else, not Pandora, no where. There is so much variety and sports that the content keeps you.

    $12.95 or $20.95 means nothing! That's one week's worth of coffee for every listener. As the economy gets better, this perfect storm of hardship wiill turn into a combination of powerful forces that will provide long term gains for theis company and its investors.

  • Report this Comment On June 17, 2009, at 6:55 PM, TxTom wrote:

    I'm picking up a 2010 Camaro SS tomorrow that is equipped with a Sirius/XM radio. Within a few days I'll have the Apple equipment and app (if available by then) and after the first free three months, I'll happily pay for the Sirius subscription. I've been wanting one forever, and I don't believe I'm the only one. This is America! We love bells and whistles...

    SIRI has been working constantly to come out of the dumps, and they WILL SUCEED!!! Yeah, I own the stock too... so I'm biased. The Camry news didn't hurt anything either. Sirius is here to stay!

  • Report this Comment On June 17, 2009, at 10:08 PM, CR3007 wrote:

    cantbefoolish, not sure where you get your info. trying to relate SIRI to BAC is a bit ignorant. BAC cleared 4billion in net income last year, they were one of the few banks to remain profitable. Yes, they bought Merrill who lost in 2008, but were not a combined company until 01/2009/ YTD Merrill has been the most profitable part of BAC and in close 2nd, the Countrywide unit. BAC has diversified revenue streams and will hit 100billion in revenues this year based on its run rate. SIRI on the hand is being faced with stiff competition, one of which Pandora, which I would GLADLEY pay monthly for if they start charging. The content on SIRI has become terrible over the years and the only reason I stay with it is because of the CNBC radio access. Im still not sure why I would upgrade my subscription to get this, when I have Pandora or Last FM, no commercials, free, way better music, unlimited channels, and easy hook up to stereo and most newer cars. SIRI will die to a better competitor eventually. I dont short stock, just being realistic.

  • Report this Comment On June 17, 2009, at 10:55 PM, SatRadioMan wrote:

    Honestly, I think SIRI is a year too late to the party, and it's only available to folks with the upgraded account?

    Biggest disappointment is lack of sporting events and other goodies. I'm sorry, but Stern alone isn't going to be the killer wave here, not when the only other content is the music. There are FAR better choices for this (Slacker/Pandora).

    As a 6 year subscriber, I have seen the music selection and quality fall drastically on SIRI. Too bad other alternatives are superior. Without the sports streaming, this thing will not be the big hit it could be.

  • Report this Comment On June 18, 2009, at 8:11 AM, siriradio wrote:

    Fire this rick guy

  • Report this Comment On June 18, 2009, at 8:54 AM, wtmdx82 wrote:

    just saw some advertising for the iPhone and iPod Touch app. apparently it's available now....

  • Report this Comment On June 18, 2009, at 10:11 AM, SatRadioMan wrote:

    Newsflash:

    NO Stern, NO MLB, NO NFL available on this app!

    This is a HUGE disappointment for those fans!!!

    Without content you can't get elsewhere, what's the point? Yet another blown opportunity from SIRI.

  • Report this Comment On June 18, 2009, at 10:49 AM, cantbefoolish wrote:

    CR3007, I agree SIRI is no where near as big a company as BAC, but you can't deny that combined with Merrill and Countrywide, their losses were much larger than SIRI. Saying that I'm ignorant is a bit off, since I've made quite a bit of money trading BAC. So,

    let me ask you this.... For the same reason people think that nobody will pay the extra few bucks to get Sirius/XM, why would anybody pay Merrill $100 commission per trade and an annual fee, when I can get $5 trades with Etrade, and no fees? Which is the more outdated business model - $3 more per month for entertainment, or $95 more per transaction?

  • Report this Comment On June 18, 2009, at 2:51 PM, ibtd4 wrote:

    I hate to say "I told you so" but I did. Download numbers don't count, only activations do and the street seems to know this thing is a flop. It was priced in months ago when the news leaked and it was priced in a basically no value. That's what it has, no value. Nobody will pay $20 a month for what you can get for free.

  • Report this Comment On June 18, 2009, at 10:32 PM, TxTom wrote:

    I'm going to activate, as soon as my three free months are over. I want to see how many people think there's "no value" when the stock triples.

    I could have Direct TV and a dish on top of my house too, but I prefer RoadRunner cable.

    I want the music I want, where I want it, and anytime I want it while driving. I like the Sirius features, including all the sportscasts. Everyone has their own tastes, and SIRI will get their share of business. If they can't do it with present management, they'll be bought out and run correctly by someone who can.

    $2/share by year end 2009, if not before.

  • Report this Comment On June 19, 2009, at 11:30 AM, voicedupdotcom wrote:

    There will be a lot of people paying $3 or $13 (depending on the package) instead of purchasing a satelite receiver for the car. The Iphone can be hooked up with an AUX cable to any car radio. The application will offer 120 channels of sports, talk and music. What is concerning is that Stern will not be available as part of this package. Could SiriusXM be working on another application seperately? Only time will tell. Another huge step for SiriusXm is Toyota installing the receiver at the factory.

  • Report this Comment On June 19, 2009, at 5:45 PM, vdronex wrote:

    I think SIRI is an outdated model. I was driving home a few days ago and was just damn well curious as to why I can't get like 10-15 stations for free supported by ads? This would generate ad revenue for SIRI, allow more exposure to the company and its product, and then allow it to advertise for free its premium products. It just makes sense to me but what do I know? A siri app for a few million Iphones with a fraction of users with Sirius and even less willing to toss in a few extra bucks seems like another big mistake from a company with so much potential.

  • Report this Comment On June 23, 2009, at 10:51 AM, MtnCowboy wrote:

    This could be the next facebook/twitter/thinkpad/i-pod/netflix of the future. The extent or the growth of the application and the tech will depend upon sales. This stuff that HG Wells thought of and the stuff Dick Tracy and star trek used is here and getting more complicated all the time. I had a computer before Microsoft. That really was the dark ages. Do you know how many lines went into just the login page? C:prompt

    Do you think that those satellites are used to their potential and past their technology? MAYBE

    For gosh sakes man, we have telephones in our ears.

    What next? My bag phone was a suitcase compared to today. And you couldn't get service everywhere. Does Apple and others have deep enough pockets? We'll see.

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