A Million Questions for Sirius XM

Two weeks as the top music download in Apple's (Nasdaq: AAPL  ) App Store can do a satellite radio operator good.

Sirius XM Radio (Nasdaq: SIRI  ) announced yesterday that its Web-streaming application has been downloaded more than 1 million times by iPhone and iPod touch owners. That press release may have sent Sirius XM bulls on a high-fiving frenzy, but what wasn't mentioned in this announcement probably led the stock to close lower on the day.

After all, the program is a free download. Sirius XM doesn't make a cent off it, unless the user actually activates the company's premium streaming service. Which leads us to three crucial questions:

  • How many existing Sirius or XM subscribers agreed to pay $3 a month for access?
  • How many new Sirius or XM subscribers agreed to pay $13 a month for the service?
  • At the very least, how many App Store visitors are taking Sirius XM up on its weeklong free trial offer?

Without answers, we only have confirmation that Sirius XM's brand is strong enough to draw an initial crowd. Are brisk download rates true proof of success? Sirius XM's official channel on Google's (Nasdaq: GOOG  ) YouTube just recently topped the 1,000-subscriber mark -- a puny number, when you consider that YouTube subscriptions are perfectly free, and Sirius XM has loaded its channel with nearly 150 celebrity clips.

A million downloads through Apple sounds a whole lot better, but we'll probably have to wait until the company's next quarterly conference call to gauge whether iPhone and iPod streaming has boosted Sirius XM's overall visibility.

The rate at which downloaders activate streaming service will reveal whether there's a market for premium online radio. Unlike Sirius XM's clear advantages over terrestrial radio, a CD player, or even an iPod jack, the competition here won't guarantee an easy win. There are way too many companies providing online streaming for the iPhone and iPod without monthly charges, including well-heeled old- and new-media heavies CBS (NYSE: CBS  ) , Time Warner (NYSE: TWX  ) , and Yahoo! (Nasdaq: YHOO  ) .

So what are you afraid of, Sirius XM? The numbers will ultimately decide whether your App Store gamble was truly worthwhile. Let's see them already.

Other ways to slice and dice satellite radio fandom:

Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services 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. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool's disclosure policy is still listening to the Mutual Network on its crystal set.


Read/Post Comments (27) | Recommend This Article (11)

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 July 07, 2009, at 11:34 AM, vairman wrote:

    Who pays you guys to write neg. articles about SIRI? Terrestrial radio companies?

  • Report this Comment On July 07, 2009, at 11:40 AM, betweenthehedges wrote:

    The only fact from this article is that there are over 1 million people that have downloaded the app. Yes it is free for a few days, but then you have to pay. The information is not out yet on paying subs. But don't forget, all music sites will soon be pay sites because otherwise they are in violation of artist's copyrights. Pandora and Slacker are horrible, but soon you will have to pay for them as the music industry will soon be suing them for copyright infringement. Sirius is in compliance and as all music downloads will soon have to charge for use, it is a far superior product.

  • Report this Comment On July 07, 2009, at 11:48 AM, betweenthehedges wrote:

    One additional question to ask is how many radios are you putting in your recently acquired contracts with Hertz and VW Certified Pre-Owned. Also, ask how does an automobile rebound affect your future earnings outlook. One final question, since so many people are saving cash now, does the ability for increased Christmas spending affect the bottom line. One final question, I wonder why Mel got a contract extension and a sweet option pay package. Is he about to report an upside surprise? Oh, what if you continue to add 500,000 new subs a week as the I Phone becomes cheaper and more accessible to consumers.

  • Report this Comment On July 07, 2009, at 11:53 AM, trammen0 wrote:

    Another high school level article by the fool..... It must take you years for such fine work to come out.... Stick to something you do best like worshiping worthless cramer..........

  • Report this Comment On July 07, 2009, at 11:56 AM, JPS007 wrote:

    Another laughable MF article.

    Let me turn the tables. Of the millions and millions of solicitation sent out by MF, how many turn into paying subscribers. Probably close to 0. Unlike MF, Sirius XM provides a services people actually like and value.

  • Report this Comment On July 07, 2009, at 12:21 PM, doogie1234 wrote:

    What is SIRI afraid of? I would say nothing, certainly not the inane motley fool commentators. Numbers are released at specified announced times, after auditor review, etc. I would think you would know this - did you even graduate High School?

    App Store gamble? Where's the gamble? They're not "rolling the dice" on this. The iphone app is just another avenue for SIRI to get their product out in the market. Just so you know, SIRI is also still in cars and homes (just to educate you a bit since you obviously know very little about the Company).

    Try again after you've done a bit of research.

  • Report this Comment On July 07, 2009, at 1:28 PM, JPS007 wrote:

    Lets take a conservative look at this....

    Lets say that only 1 in 20 sign up for the service, and lets even say that 90% of them already have Sirius XM and are simply adding internet.

    Lets do the math:

    100,000 at $13 = $13 million a year

    900,000 at $3 = $27 Million a Year

    Total = $40 Million

    ...and that's conservative, and that's only the first two weeks, and that's without Howard or MLB, or NFL. The goons at MF have proven themselves irrelevant. This is 40 mil, that we weren't talking about only 2 months ago.

    This is Big!!!!!

  • Report this Comment On July 07, 2009, at 1:35 PM, njv324 wrote:

    I second vairman: who is paying for all the negative articles and comments, anyway? Very little if any, positive ever comes out of Motley Fool where Sirius is the topic.

    My question is what is the purpose of this article, anyway? Why would anyone download an app that they cannot use unless they intend to pay for it? Just to have it on thier screen to fill an empty space? I think not.

    It is correct to say brand awareness is strong, yes it is. I suspect that many Sirius subs have iphones and wanted to extend the service to thier phone, cheaper than buying a stiletto, and only need one device. Ever think of that?

    It is one thing to write negative and to try to justify your paycheck, but at least put some effort into it. This article is total fluff not worth the time it took to write, edit and post.

    Ride with the Big Dog.

  • Report this Comment On July 07, 2009, at 1:35 PM, JPS007 wrote:

    sorry error in my math.

    It should read...

    5,000 at $13 = $780,000 a year

    45,000 at $3 = $1.6 Million a Year

    Total approx = $2.4 Million a Year

    and that's after only two weeks of being available. Lets extrapulate and use the half-life principle (again, conservative).

    Week 1 and 2 = 2.4 Million

    Week 3 and 4 = 1.2 Million

    Week 5 and 6 - .6 million

    You can see that using this conservative fuzzy math, they would be adding 4.2 million per year to thier coffers.

    and this is without Howard, NFL, MLB, without Blackberry or smartphones.

  • Report this Comment On July 07, 2009, at 1:38 PM, Fredlee009 wrote:

    I have 1 million questions for Rick A.

    1. How do you look yourself in the mirror every morning?

    2. Who told you it would be a good idea to think?

    3. Whos the fool who PAID you to write down these thoughts?

    4. Why are you deciding to base your entire career on being wrong about this company?

    5.A gamble? Where is the "gamble". Explain what this "gamble" is. Cost to develop the app? Nothing to mention. Irrelevant. So I say again, whats the gamble?

    The rest will come later.

  • Report this Comment On July 07, 2009, at 1:53 PM, tpron wrote:

    Rick, I hope someone investigates your motives and that of Motley Fool. Your bashing of Sirius is very disconcerting.

  • Report this Comment On July 07, 2009, at 2:15 PM, Terryoutofit wrote:

    I must agree it's sure getting old. I joined the subscription to MF recently but an now rethinking the whole thing. They tend to rebash and rehash way too much. Getting out soon.......

  • Report this Comment On July 07, 2009, at 3:15 PM, georgieporgy wrote:

    Rick Aristotle Munarriz

    Why oh why do you continue to write such negative comments.

    Any one will know that the Siri-Apple i-phone will attract at least 5-million $3 per month and 1-million $19 per month subscriptions which will add at least $400-million to the business case bottom line. There may be some cancelled subscriptions but with the synergy savings from the merge with XM still being realised I believe that Siri-XM could well acheive $500 million cash flow positive for 2009.

    The outcome will not be known until February 2010 but with cheaper financing in the bag, the money woes are now well and truly behind Siri-XM.

  • Report this Comment On July 07, 2009, at 3:22 PM, betweenthehedges wrote:

    I'm waiting for the panic sell off based on the scared lemmings then I'm going to buy.

  • Report this Comment On July 07, 2009, at 3:22 PM, plange01 wrote:

    sirius is great to listen to but it wont ever make money..

  • Report this Comment On July 07, 2009, at 3:28 PM, betweenthehedges wrote:

    Autos fall off the cliff, Siri barely loses subs, when autos ramp, Siri subs will ramp. Fixed costs will be nothing compared to the revenue generated. Lets just assume a double in subs. 36 mill subs x 14.95 per mo x 12 mo = 6.5 bill a year. Buy when merchandise is cheap and sell when it is jacked up. Just my take.

  • Report this Comment On July 07, 2009, at 3:51 PM, DiscoFinance wrote:

    Sirius XM is notoriously ambiguous about good news. It never really gives investors a strong foothold! See the movie: Stock Shock (stockshockmovie.com) to get the whole inside story.

  • Report this Comment On July 07, 2009, at 4:32 PM, BullishBroker74 wrote:

    By Brandon Mathews

    Traditional forms of media including television, radio and print are threatened by the success of Sirius XM Radio (SIRI). There is absolutely no doubt in my mind that the organizations behind traditional forms of media have united on a single front to denigrate the Satellite Radio provider at any and all costs. I know this first hand as most of the negative comments left on Satwaves.com can be traced back to everything from terrestrial radio station operators to the National Association of Broadcasters. These traditional media conglomerates control everything most people see and hear. Consider if you will the number 1 hit by the Black Eyed Peas in which the words “Satellite Radio” have been bleeped out by terrestrial radio stations from coast to coast.

    In the years since Howard Stern first joined Sirius, traditional media has made a point of downplaying Howard Stern's relevance. Just last October, the Los Angeles Times published this article which made the claim that Howard Stern was no longer relevant, and that his listeners had dwindled to a fraction of the number that once tuned in. The Los Angeles Times happens to be owned by Tribune; “America’s largest employee-owned media company, operating businesses in publishing, interactive and broadcasting.” The same article was syndicated and republished on an almost daily basis for several weeks that followed, assuring that the story would be told in every major U.S. market and maintain a top ranked listing in google news search results.

    That is why I could not help but laugh hysterically at the newest media attempts to control the American public’s view of Sirius XM Radio through new articles that claim Howard Stern will leave Sirius XM nearly two years from now. These articles now make the claim that Howard Stern is so important and popular, that Sirius XM’s survival hinges on whether or not Howard decides to stay with Sirius XM when his contract comes up for renewal in 2011! Unfortunately, some people seem to be buying into this manipulation and fear-mongering. The reach of these media outlets is unlimited in scope.

    As an example, on the eve of Sirius XM’s announcement that its iPhone application had reached a million downloads, a story was written suggesting that Sirius XM stock would be a good short sale candidate by a known writer who has denigrated Sirius for years. I recall writing that it seemed like a signal was being sent on the Satwaves forums the moment I read it. As trading progressed the following day it looked as if Sirius XM stock would rise precipitously on the iPhone application news. CNBC even picked up the story, but if you follow Sirius XM you knew what was coming next.

    It was then reported that the app, despite having over a million downloads, had a low rating based on the absence of The Howard Stern Show. The very same show that the media has been proclaiming to be irrelevant. The stock ended the day's session flat as a result. Out of nearly 19 million subscribers and out of 1 million iPhone app downloads, the app was given a low rating by a mere 38,000 people. It does not take a rocket scientist to figure out that anyone can bash the application, whether or not they even own an Apple device. I rated the application 5 stars, and I have no iPod nor iPhone. I simply signed up using my AOL account. It can hardly be deemed a reliable source of consumer sentiment compared to the fact that it remains the number 1 downloaded music application.

    As for Howard Stern, terrestrial radio is already on life support. Clear Channel is knocking on bankruptcy’s door. When it comes to radio companies, there is only one that is growing. There is only one that can offer Howard the freedom to do his show and produce new shows without fear of retribution from the FCC. By the year 2011, it is probable that no radio company in existence would be able to afford Howard Stern while offering him a minuscule percentage of his current national audience. Only one radio company can offer The Howard Stern Show a potential global audience in the years to come. That radio company is Sirius XM Radio.

    As for the media manipulation: People should make a stand. If you’d like to be told what to read and hear only that which is selected for you, you might want to consider a move to North Korea. Turn off your am/fm radios. Pick up a Satellite Radio and subscription. Send a message to traditional media that they cannot control what you see and what you hear. I have and in this lies true freedom.

    Position: Long SIRI

  • Report this Comment On July 07, 2009, at 5:05 PM, Fool wrote:

    MF might want to consider hiring this guy..

    Best artice I've read on MF! Great stuff..

  • Report this Comment On July 07, 2009, at 5:08 PM, riz2121 wrote:

    That was meant for Bullsih Broker..really good stuff!

  • Report this Comment On July 07, 2009, at 6:34 PM, cantbefoolish wrote:

    Hey Rick, if you think the app won't mean anything, how about selling your shares to me at $.06 again?

    I'll even take it off your hands for $.20 and I'm sure plenty of people here would love that gamble. Come on MFer.

  • Report this Comment On July 08, 2009, at 11:36 AM, betweenthehedges wrote:

    Let me give you a phrase that is going to petrify Rick and the shorts in late 2009 and 2010 going forward. "Sirius XM is STANDARD in all of our vehicles." If you do not believe me, go to KIAs website and scan through their line of products and start covering your positions and looking for other stocks to bash. STANDARD, not upgrade, but STANDARD, STANDARD, STANDARD. STANDARD in a $13000 vehicle. No longer a luxury item. Subs double by 2011.

  • Report this Comment On July 08, 2009, at 12:23 PM, betweenthehedges wrote:

    Lets go through the list of companies that recently announced increasing their installation of Sirius XM: Toyota (in all Camry's), KIA - standard in all 2010 certain models, Hertz - standard in luxury brand vehicles, VW - all certified pre-owned. Lets rehash the IPOD and IPHONE app. 1 mill downloads in a mere two weeks.

  • Report this Comment On July 08, 2009, at 5:47 PM, lindalew143 wrote:

    Dear Motley Fool,

    I just think it's great how you're writing creative articles 2 to 3 times a day that mention Sirius XM's stock. When I research stocks, I like looking for stocks that have news & articles written about them on a regular basis, negative or positive. That helps me to know that the stock is a stock of interest. You must obviously have an interest in Sirius XM stock, why else would you take so much time out of your day, every day, to write about it? That's great! For a stock that you consider to be worthless, not worth buying, I find it amusing that you're constantly writing about it. I've read on some of the message boards that people like to put a block on the Motley Fool so that they don't have to be bothered by all the negative articles that have to read. Not me, I love the way you constantly bring attention to a stock I own. Lately, the number of articles the Motley Fool has posted about Sirius XM stock has intensified and manifested into multipule articles daily. The closer Sirius XM gets to reporting and they get to showing the fruits of their labor, the more creative you get with the numerous articles you post about the stock. I don't commend you on the negative things you say about Sirius XM's stock, but I do commend you on your creativity. From one creative person to another, I have to say, you have such a wonderful imagination! It really shows in the articles you write about the stock, you can work it from so many angles! Most people would say "What's your point?" My point is this: The clock is ticking & time is running out, so write as fast as you can and as many as you can (articles that is). Slow & steady wins the race. You may be quick with your pen and for the short term, the articles you write serve your purpose. As for the long term, you know, as well as I, that they are worthless. So write it till you can't write it & let your imagination run wild. The race isn't over yet!

    By the way, have you ever thought of maybe taking a little more time out of your day to actually report on some companies you do like? Maybe it's just easier to give advise to your readers about something you created, as opposed to something you may really know about.

    Thanks Motley Fool!

    Sincerely,

    Entertained Reader

  • Report this Comment On July 09, 2009, at 2:23 PM, betweenthehedges wrote:

    If you have been following the Motley Fools advise since this stock hit .05, you are currently down 800 %. The stock price is consolidating here for another upside move as suggested by entertained reader. As we approach the quarterly report, the shorts will panic out creating a massive upswing followed by further upswing following the revenue generating subscribers additions followed by multiple upgrades and another 500% to 800% move. Don't follow the Motley Idiot on the line against Sirius.

  • Report this Comment On July 09, 2009, at 2:55 PM, wordcarr wrote:

    Sirius XM is what it is; a lose lose situation.The reason the writing is negative is because there is nothing positive to write about.Bad idea, worst business plan, at best a scam. Sorry you lost your shirts investing in this dumb project,Don't shoot the messenger. The writing is on the wall. MF name calling won't get your money back.

  • Report this Comment On July 09, 2009, at 2:55 PM, georgeh3ci wrote:

    I won't repeat all the comments about MF bashing SIRIUS stock. No need to belabor the point; it's way to obvious. My question is why?

    Could it be that MF has been the fool in ref. to SIRI and is too proud to admit it? I would hope it's as simple as that but fear that they might actually be participants in the manipulation of this stock. I see no other way to justifly their incessant SIRI bashing.

    I used to regard MF as a respected source of unbiased and insightful information. No longer. Don't read any of their articles except iin ref. to SIRIUS. Why should they be right with other stocks when they are so off base with this one.

    Sad MF, very, very sad.

    g

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