Pandora Passes Sirius XM Radio

Sirius XM Radio (Nasdaq: SIRI  ) had a healthy run atop the music category in Apple's (Nasdaq: AAPL  ) App Store, but it's Pandora's turn now.

Pandora's music-discovery application is once again the top draw for iPhone and iPod touch radio buffs, where it has typically reigned since last summer's App Store launch. It was bound to happen. Sirius XM was putting plenty of marketing muscle behind its web-streaming application, but Apple users have a funny way of gravitating toward free content. I guess after paying $20 or $30 a month for unlimited data, slapping on another premium is a hard sell.

Sirius XM Radio fans will argue that their product is superior, though Pandora certainly has its charms. It spits out customized playlists based on your preferences, getting better as it collects more data. It's a model that works well for Netflix (Nasdaq: NFLX  ) , Amazon.com (Nasdaq: AMZN  ) , and TiVo (Nasdaq: TIVO  ) . It also helps that you can skip through a song you don't like, something that satellite radio can't do within the same genre-specific channel.

Pandora's weakness as a true proxy for Sirius or XM is that it's just about music. There's no news. There's no Howard Stern. Unfortunately for Sirius XM, there are other free streaming apps including Stitcher, Yahoo!'s (Nasdaq: YHOO  ) Y! Music, and a public radio tuner that help fill the talk radio voids. And that's the beauty of free apps. You don't have to download just one.

Sirius XM did make the most of its time at the top, amassing more than a million downloads over a couple of weeks. The company has not gone public with the number of actual activations of the premium service, which is what will ultimately dictate the app's success.

Losing the yellow jersey isn't the end, of course. The downloads will continue, though at a slower pace unless a free ad-supported version is launched.

App Store shoppers are simply showing their true colors again, flocking to either free apps or those that involve a single upfront payment.

What would you do to get the Sirius XM app back on top of the music heap if you were CEO Mel Karmazin? Post your thoughts below.

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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 and TiVo. 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 (24) | Recommend This Article (19)

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 14, 2009, at 2:21 PM, tonytheappraiser wrote:

    Mel needs to skip the monthly premium for the SiriusXM Iphone application and substitute it with banner advertisements. They have proven their worth through market share with over a million downloads which could command higher advertisement prices. This way it could remain completely free, gain more subscribers/downloads, and ultimately command much higher advertising prices to boost profit. If Howard Stern wasn't such a selfish prick, he'd help the company by allowing his show to be broadcast on the app. Mel is doing it all wrong and needs to seriously boost advertising, especially for the backseat tv service that is wonderful.

  • Report this Comment On July 14, 2009, at 2:29 PM, Fool wrote:

    LOWER PRICE... PRICE.... PRICE...

    $9.99 yr. for ever...................

    ONSTAR, XM, Apps, etc.. should be cheap...

    Let's face it, after a few weeks or months the trill is gone...

    Radio & Pandora rocks because it's free................. Charge the advertizers not the listeners...................

  • Report this Comment On July 14, 2009, at 2:29 PM, ccZaphod wrote:

    I'm a long time Sirius subscriber and bought the premium online streaming when the iPhone app became available I find myself listening to Pandora more often than Sirius due to sound quality. Over 3G, the Sirius sound quality seems to jump around, sometimes good, sometimes fair.

    The lack of Howard is also an issue, I'm going to give it a few more weeks, but will likely cancel my premium streaming account and stick to listening in the Car.

  • Report this Comment On July 14, 2009, at 2:33 PM, EgisCoder wrote:

    Offer a 20 channel free version supported by ads. Offer individual channels for $1/$2 each. Offer additional packages that can be added on. Get subscribers in the door first, then upsell them.

  • Report this Comment On July 14, 2009, at 2:38 PM, Fool wrote:

    Well, being both a Pandora and Sirius subscriber I have this to say about that:

    Sirius: Stick with your bread and butter - Great music channels, great live sports info, and great live entertainment, and news and talk channels. Keep working on keeping the content as fresh and varied as possible and keep it in the cars. Granted the Auto industry is sucking wind but its not permament and thats ultimately what weill drive (pun intended) more subs. Keep making the radios better, make sure new home stereos are Sirius ready and dont charge so much for multiple units. Revamp the pricing structure

    for more customer choices and get rid of the SIrius-XM dicotomy (The MiRGE is not a solution)

    Pandora: Got nothing but good things to say except it still doesnt work on my cell service's Motorola Q and dont make it too hard to program music variety. They tend to play thumbs up songs way too often. I recently upgraded to pandora One ($36 per year) and love the Desktop App and Sonos compatibility.

  • Report this Comment On July 14, 2009, at 3:15 PM, rickfiory wrote:

    Sirius/XM is clearly a much better product. The addage "you get what you pay for" has been used for decades and it certainly applies here. I have been a fan of Sirius/XM for years. I got tired of getting hit with the media trying to sell me something every 5-10 seconds and wanted to hear music. I listen to about 5-10 diferent stations on a regular basis and I get to hear the music that I like with a lot of surprises on a regular basis. With Pandora, I set up my account and found that it wass picking songs for me that didn't seem to fit. Apparently someone programs this and again I am hearing something that someone else wants me to hear. With Pandora, I was hitting the skip button a lot or listening to something inadvertantly to the end while involved in something else. Pandora is not available in my car, or on a portable device. I'll stick with my XM. It IS worth the bucks.

  • Report this Comment On July 14, 2009, at 3:46 PM, beatnik11 wrote:

    In my opinion Pandora is really far superior to Sirius and although I do not listen to it on my iPhone (I really hate earbuds) I do listen to it at work often. I have made 7 distinctly different music stations to fit what ever mood I happen to be in and most importantly, they are filled with bands or artists that I have happened to like or are generally similar. My only really beefs with them are the fact that when a song is thumbed up it does play a bit too often, there needs to be a larger amount of songs within a particular artists library that can be played, and it does not database the music you play (either by listening to their radio or just with your own music) like Last FM does. Sirius on the other hand its an extra charge ontop of the money you are already paying for the iphone which is not cheap. Its also like paying for cable TV, sure you have a ton of choice, but the problem is that you have no care for 98% of the crap they offer, and even the channels that are tolerable could be much better. If one really needs their talk radio fix then one can explore the wonderful world of podcasts, I think I will pass on Howard Stern

  • Report this Comment On July 14, 2009, at 3:55 PM, JamesRobertDobbs wrote:

    Re rickfiory, Pandora doesn't have programmers. It uses musical elements of the songs you've said you like to pick other songs with the same musical elements.

    I think it works well in that regard, but it has a MUCH smaller catalog of songs than Sirius.

    Also, it has no human element. If a person just wants to hear a collection of songs served up to them the way their iPod might serve up songs in shuffle mode, I guess Pandora would work for them.

    But if a person likes hearing music arranged in programs, maybe with some intelligent, interesting comment inserted by a music expert, Sirius is the way to go. I'm not talking about the various Pop channels, I'm talking about channels like Underground Garage (Little Steven), Deep Tracks etc. No other service offers this kind of quality programming for music lovers, in my opinion.

  • Report this Comment On July 14, 2009, at 4:19 PM, yamazed wrote:

    ONce again RICK the guy that should get FIRED is bad mouting a company.

    Seriously stock holders should SUE you. First you talk bad about my UYG/FAS/SKF/SKF stocks and now about SIRI.

    You are going to far and I think you should consider consequences.

  • Report this Comment On July 14, 2009, at 4:25 PM, Fool wrote:

    Trying to compare the two is insane

    Comedy/BBC/CNN/Sports etc and music va a cute female bear name.

    Its all cheap-If Blue Cross raised your monthy copay 10 dollars you'd pay it and not grumble- at least from sirius you get something for your money

    You people are trying to compare networkTV=Free

    to cable-No comparision except for what they are- quite different

  • Report this Comment On July 14, 2009, at 4:29 PM, JWILLI44 wrote:

    I am a long time XM, now Sirius XM subscriber. I have had portable satelite units for the last 3 years and have been a xm subscriber since 2002. The way to increase iphone subscribers is price. Before the Merge Mel Karmazin kept talking about A La Carte becoming available and how it will help consumers save money . Now over a year after the approved merger, Mel has only made A La Carte available on one radio from Sirius. While developing the app, why not make A La Carte available? If I'm a 20 something year old and I just want to listen to my genre, say hip-hop/r&b, why shouldnt I be able to get 10 chanels or so for about $4.99 or the A la carte price of $6.99 for 50 chanels? Having 120 chanels sounds good, but most people will have their favorite 5 - 10 chanels and that's all they need. Sure they have an Elvis chanel, gay chanel, playboy, Bruce Springstein, etc.....I don't care!!!I just want my Hip Hop, The Power, maybe howard Stern once in a while. Let me choose my chanels and not pay $12.95 for Sirius XM to bundle a whole bunch of chanels that i will never listen to. The $2.99 for existing subs is a good deal if you already have the radio in your car. For someone to pay $12.95 for the iphone app alone would be silly. I get 170 chanels on my xmp3, all sports included. The iphone app offers 120 and no live sports and would still pay the same $12.95. Not realistic or a good value.

  • Report this Comment On July 14, 2009, at 4:33 PM, WaxTadpole wrote:

    I like the fact that Pandora doesn't need to launch rockets into OUTER SPACE to give me streaming music.

  • Report this Comment On July 14, 2009, at 5:14 PM, yahoomania wrote:

    Pandora will NOT remain free forever. They are reeling everyone in, then will begin a small monthly fee......increasing over time. NOTHING stays free forever!

  • Report this Comment On July 14, 2009, at 5:18 PM, BigVincent wrote:

    Rick is at it again with a title that belittles sirius/xm radio.

    Who in there right mind doesn't like free?

    Who doesn't mind paying for content?

    Which of the 2 companies pandora, or sirius generates more revenue on a yearly basis in the billions?

    ANSWER: sirius/xm radio of coarse

  • Report this Comment On July 14, 2009, at 5:42 PM, SatRadioMan wrote:

    SIRIUSALDO,

    They could do what XM did 5 years ago.....have bigger playlists and better DJ's.

    Right now, on the music merit, Slacker and Pandora are millions of light years ahead of SIRI.

    As a former lover of SDARS, they have gone tremendously downhill in the last 3 years alone. While having many genres and formats, SIRI has succumbed to the lowest common denominator of music selection and variety. Streaming the same 80+ songs per channel that you can get on free services.

    Without Stern and sports, there is very little compelling content remaining on the SIRI iPhone app.....sorry, but CNN etc has but a handful of listeners compared to the music channels, and music is clearly done better by the other free apps.

    What should Mel do? Fire half of the chatty worthless DJ's, put programmers that actually know what they are doing/talking about, and expand the music experience.

    Why pay for something that is clearly done better by free apps?

    Not a hard question to answer.

  • Report this Comment On July 14, 2009, at 5:55 PM, Whip005 wrote:

    Would get Siri if I could pay for just the 5 or so channels that I like, ala cart is the way to get subs. I have listened to all / my iPhone In various cars using a Griffin FM transmitter & found that it is the quality of the car audio system makes for great sound. In an older truck, just like mono, Vet better, Volvo better yet, 335 Bemmer super. Siri, Pandora, Imeem & iPod all the same. The only thing better is in a Bemmer / USB then it sounds like the band is in the back seat of the car. Fabulous for all formats.

  • Report this Comment On July 16, 2009, at 4:34 AM, ozzfan1317 wrote:

    Siri was an old investment of mine its a dead man walking now. I would give OOIL a look if you want a penny stock with big time upside.

  • Report this Comment On July 16, 2009, at 1:01 PM, DavidAro wrote:

    What I don't see is free channels with a dj to keep kids up on the new stuff.

    Offer people a button to download songs as they play.

    Work a deal with Apple.

    National Ads.

  • Report this Comment On July 16, 2009, at 2:22 PM, wordcarr wrote:

    Selling ads is not a option. Sat radio cannot sell ads by law.Selling ads would be the solution. Sat radio is doomed.

  • Report this Comment On July 16, 2009, at 2:37 PM, beatnik11 wrote:

    Kids dont need DJs to let them know about music, in fact they often get in the way by making choices for the kids. In the world of mp3s (legal or not) and the internet, its easier than ever for people to actively explore music that they may find enjoyable or interesting rather than just being a passive radio listener who gets their information from a DJ

  • Report this Comment On July 16, 2009, at 4:35 PM, delnmelb wrote:

    Can someone please tell me why Sirius doesn't consider the notion of purchasing Pandora, assimilate the technology and implement it so that Pandora is offered as a stripped down version of Sirius as to not tarnish the Sirius brand.

  • Report this Comment On July 21, 2009, at 12:27 PM, toshimelonhead wrote:

    I have both Pandora and Sirius XM (trial) apps for my iPod touch. Sirius XM isn't worth the additional $2.99/month when Pandora is free and the better product. The only concern I have with Pandora is that if the RIAA ever boosts internet royalty fees, Pandora would be out of business (see link below.)

    The best case scenario would be for Apple to purchase Pandora and allow users to listen to it while surfing its iTunes music store, or when a user is on an iPhone or iPod touch, allow them to listen to Pandora while multitasking. Currently Pandora can't be used while other apps are running on iPods. By purchasing Pandora, users could be exposed to more music through iTunes and while on other apps, and thus be exposed to more music for possible purchase. Of course, Apple could also expand their own "Genius" feature to do the same thing as Pandora, but this won't attract as many of the Pandora users without the Pandora brand name.

    I do not see Sirius XM lasting for long without major cost cutting. This has always been Sirius XM's problem; the satellite infrastructure is expensive to maintain and they still lose to Apple and now Pandora. I remember looking at satellite radio five years ago as a birthday present. I ended up getting an iPod since it was cheaper and a better product. That same issue is now happening with Pandora. The cheaper, better product always wins, and Pandora is no exception.

    http://blog.pandora.com/pandora/archives/2007/03/riaas_new_r...

  • Report this Comment On October 03, 2009, at 2:16 PM, RaulChapin wrote:

    I don't know if this is new, but you can not access Pandora outside of the USA. Check their web site out, apparently some "licensing problems"

    Either Sirius is paying a lot more to stream globally or there is something very fishy... I just bought a Home entertaiment system that had Pandora advertising on it, after reading it I thought this was the best option for me, as i want songs similar to what i like, with NO human chit chat. I was willing to pay for the service... but the service is temporarily not available.

    I am not located in some obscure rogue nation, this is Canada i am talking about... anyway something fishy is in the air! I figure maybe i can get some insight into this from a group of very knowledgeable individuals (with many different points of view :) )

  • Report this Comment On February 26, 2010, at 11:52 PM, HumanzRthaVirus wrote:

    There's always going to be the cheap crowd that can't afford even $15 or $20 per month for tons of great content, a signal that doesn't fade out after driving 200 miles outside a station's range as happens with terrestrial radio, NO commercials etc etc etc. Fortunately, many millions of people out there actually GET what Sirius/XM is offering and ARE willing to pony up for it.

    I'm one of those people. I bought my car in June of last year and it came with a three month trial membership to Sirius/XM. After the three months was up, I let my subscription lapse. About a month later after quickly tiring of my local terrestrial radio with the same 10 to 12 songs on hourly rotation and horrific djs as well as the music that I PAID FOR and downloaded onto my iPod, I realized just how cheap and VALUABLE Sirius/XM and it's content is. I signed back up and have been a happy camper ever since. I drive at least three hours per week day in my car, and 80% of the time I'm tuned to Sirius/XM, and the other 20% I'm playing my iPod.

    The lesson that the poor cheapskates who are all over Pandora will soon learn is just as yahoomania said, NOTHING is free forever, and soon Pandora will be charging a fee to use their service. This "free free free" talk reminds me of the internet coming of age in the late nineties when you could throw dot com on the end of any title and get millions in venture capital thrown your way as people actually thought that no one would shop at "bricks and mortar" stores anymore, everything would be web based. Now those flawed business models have been exposed because the majority of shoppers that were attracted there were the cheap non-loyal types that would drop you in a second for the next web vendor offering the same product for a nickel less. All the promotions and advertising fell on deaf ears as it attracted the WRONG audience. Those people will NEVER be Sirius/XM subscribers, as they perceive no value in the service. They're also the same folks who don't want to pay ANYTHING for the music they stream, as if the artists creating the content should be doing it for free. Pandora's own fall will be when they have to start relying on these freeloaders to pay up for the service.

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