Pandora Invades Sirius' Home Turf

Music is easy these days. Pick up your smartphone, whatever its make and model. Open up Pandora. Punch in a favorite song or artist, and rock for hours.

This is the future of radio: personalized, always-on mixtapes of infinite variety, all delivered via wireless data connections. You'll notice that I'm not dragging satellites into this. I think Sirius XM Radio (Nasdaq: SIRI  ) will start to fade away as soon as the general public gets wind of this hyperflexible alternative -- especially now that Pandora, like satellite radio, is finding its way into new cars.

In response, some Sirius fan will invariably point out that most new cars come with Sirius or XM radios preinstalled these days, either standard or as an option. A few free trial months are the gateway drug, and then you're supposedly hooked on a service you'll never want to live without again.

Well, baloney. Sirius services are cheap, but Pandora is free if you can live with an occasional ad spot or two. That's a tough price point to match, especially if you're on an eternal search for solid profits. And Pandora is making its way into new cars, too.

The streaming music service has announced deals with luxury veteran BMW (OTC BB: BAMXF) and Toyota (NYSE: TM  ) . The service is integrated into Toyota's Entune telematics system and BMW's ConnectedDrive, giving you control over Pandora from a center-console dashboard screen, and plugging right into the cars' speaker systems. It's still an early draft of streaming-enabled car entertainment, and will depend on a data feed from your smartphone. Still, it's more sophisticated than jerry-rigging your phone into the car stereo via FM transmitters, AUX plugs, or (shudder) old-style tape-deck kludges.

In due time, the phone will fall away from this ecosystem, to be replaced by the car's own data connection. I'd expect Toyota and Ford (NYSE: F  ) to sign data deals with network providers for free inclusion with a new car -- like the way Amazon.com (Nasdaq: AMZN  ) powers its Kindle Whispernet with AT&T (NYSE: T  ) 3G networks without charging any monthly fees.

That's where we're going soon enough, which is why you can't convince me to buy Sirius stock. Satellite radio is a stopgap service that will soon become obsolete -- if not by Pandora, then by some better version of the same idea.

Add Sirius to your Foolish watchlist to follow its inevitable death spiral in gory detail.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Amazon.com, BMW, and Ford Motor are Motley Fool Stock Advisor choices. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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  • Report this Comment On January 10, 2011, at 1:57 PM, waterinfo wrote:

    Most articles that talk about the bright future of SiriusXM (SIRI) have a number of negative responses that include the imminent demise of SiriusXM at the hands of "free" Internet Radio and/or music download and distribution.

    Content and programming aside, any service that would provide competition to SiriusXM would have to find some kind of revenue source, either through subscription revenue or advertising. Since audio advertising must be intrusive to the programming to be noticed, the whole idea of commercial free broadcasts becomes essentially impossible unless there is significant subscription revenue.

    However, the most important issue is wireless capacity. In order to supplant the satellite distribution of the SiriusXM signal, an internet based service would have to set up a digital audio stream to each active user, consuming large amounts of wireless distribution bandwidth and capacity. Wireless carriers would be forced to move to nearly 100% usage based data contracts in order to control usage and capacity consumption.

    To model this, I looked at AT&T's high data usage model, which is $35/month including the first 200 MB and $10 for each 100 MB thereafter. After the base usage, capacity is thus priced at 10 cents per megabyte.

    To achieve decent quality audio, of say 50 to 18,000 hertz, a digital signal of at least 6 Kilobytes per second is required. That would be 360 kilobytes per minute, or about 21 Megabytes per hour of listening. At 10 cents per Megabyte, it will cost a wireless internet radio listener about $2.10 per hour to listen to the radio. A hour a day......$63 per month, essentially 4 times the SiriusXM charge for unlimited listening.

    Even if the digital stream were compressed by four to one (which would either severely limit the quality or violate Nyquist's Theorem of digital transmission), the Internet alternative would still cost more than SiriusXM for just an hour per day of enjoyment.

    You just can't get away from the basic physics. A single radio transmission, coming from a satellite, available simultaneously to every paying subscriber, is inherently thousands of times more efficient than trying to reach individual user, from individual cell sites, using individual data streams. The wireless carriers understand this, and they cannot afford to give their capacity away to applications that don't pay their fair share of the underlying costs.

    In addition, recent FCC rulings on "net neutrality" have guaranteed that this will be the case.

  • Report this Comment On January 10, 2011, at 2:03 PM, SiriusXMheat wrote:

    Here we go......2011 and here is yet another analyst that just doesn't get it, and probably never will get it. Can't believe I just wasted my time reading this garbage.

    Anders, its all about content....not whether or not a service is free or not.

    First it was supposed to be AM/FM that would destroy Sirius/XM....and then the Iphones,etc..........and now you think Pandora? Pandora will never substitute what Sirius/XM offers. In case you haven't noticed....Sirius/XMs growth has been spectacular during even these most trying times. I have both services and Pandora will never be able to offer the choices of content that Sirius/XM does.

    Please do some research and learn more about what you are trying to write about. Wake me up with your argument when Pandora starts offering Stern, Dr. Laura, NFL,Golf, etc,etc for "free". In the meantime please move on to something that you can relate to.

  • Report this Comment On January 10, 2011, at 2:10 PM, pete163 wrote:

    These Jack legs hang in old dirty bathroom's just waiting for a chance to say something stooped. Stay Long With Sirius XM and you will not go wrong. This is nothing but a bag of shorts ready to jump out a window do to the fact that Sirius XM is going UP not DOWN.

  • Report this Comment On January 10, 2011, at 2:11 PM, Bravo863 wrote:

    Does Pandora have Howard Stern? Anders, are you completely clueless?

  • Report this Comment On January 10, 2011, at 2:23 PM, pete163 wrote:

    I read Motley Fool all the time and I must say that this is a really low and cheap shot at Sirius XM. This site of Motley Fool flip's and Flop's on more thing's than I can count ! And you want to why people will not take you Sirius on lie's about Sirius XM. Get Sirius and Stay Long with Sirius XM.

  • Report this Comment On January 10, 2011, at 2:29 PM, doubting wrote:

    Anders,

    Using your terminology, the arguments you present are "BALONEY". Could you explain to us "stupid" ones what pandoras that are "free" mean in the auto? VOICE ADVERTISEMENT. VOICE ADVERTISEMENT. VOICE ADVERTISEMENT!!! I had to write this many times with a vague hope that YOU AND THE LIKES WILL GET IT!!! People DO NOT WANT advertisement. Free or no free - I do not care to listen to music with ADVERTISEMENT INTERRUPTIONS like on terrestrial radio. Second, pandoras are one zillionth in content from sat radio. Do I need to list what Sirius offers apart from music, or you will do some dd before you write mediocre posts? Third, pandoras and the likes are so cash poor that they will never be able to afford one hundredth of what Sirius can. Fourth, pandoras and the likes may be very well killed by new net neutrality laws that will start charging their listeners five times more than Sirius does. Fifth, Sirius monthly fee equals four cups of coffee. How much do you spend on coffee per month? My point is that the service is truly affordable for a normal person. Sixth, do your homework before you rush to the computer with your doomsday regurgitation.

  • Report this Comment On January 10, 2011, at 2:31 PM, sirinsocal wrote:

    Apparently Anders is not up to date the FCC Net Neutrality ruling. Pandora is DOA. Killed by High Data Usage Fees.... "The future of radio such as SIRIUS XM Radio Inc. and CBS Corporation looks much brighter now that the FCC's latest net neutrality ruling has limited the viability of unlimited free radio over wireless internet, helping out pre-existing broadcast radio companies by eliminating the potentially harmful competition. The FCC has allowed companies to charge fees for services that consume large amounts of bandwidth, like radio over the internet would."

  • Report this Comment On January 10, 2011, at 2:34 PM, waterinfo wrote:

    If SiriusXM never signed another subscriber the business would continue to exist. It is a $3 Billion per year business that could manage expenses and stay break even or profitable. My personal projection that it will continue to grow, and there will be 100,000,000 active SiriusXM radios by 2020. But if that number is just 21,000,000 or anything in between SiriusXM will still be up and running very nicely in 2020. Will SIRI stock be a good investment? If growth ends at 21,000,000 the answer is no. If growth reaches 50,000,000 or more it will definitely be an excellent investment.

    What about Pandora. It will be a distant memory by 2020. Internet businesses need a revenue source. If Pandora is "free" it needs advertising. Radio advertising means commercials. Commercials means Pandora is no better than AM/FM broadcast. If there are no commercials, then they have to charge subscription fees. If they charge subscription fees, then they are a weak, complex competitor to SiriusXM, starting a decade behind in talent, programming, and user base.

    Without net neutrality, there will have to be volume based usage fees for internet wireless usage. Net neutrality cannot exist, any more than AT&T could afford to carry Sprint's and MCI's traffic for free when they started competing with AT&T in the 1980's. Current pricing models for wireless internet traffic yield usage costs anywhere from 75 cents to 6 dollars per hour for a streaming application like internet radio. And that just covers the transport of the data bits, not the programming. Hardly competitive to $14/month to listen all you want on SiriusXM.

    There are many more people with cars than there are people with smart phones. To a great extent smart phones are a "fad", laden with complexity and applications that go way beyond their basic utility. A lot of people carry a Swiss army knife, but it does not mean that the world no longer needs stand alone knives, screwdrivers, and pliers. Smart phones, like many "toys" are the rage for a while, and then usage becomes based ONLY on the things they do best. Making phone calls, messaging in many forms, implementing work specific applications (like the UPS driver that tracks packages with a smart phone-like device), yes. But replacing everyone’s phone, computer, radio, television, camera, and finger nail clipper means that users will have at best just a bunch of very mediocre tools.

    The bloggers who rant about all the "high tech" competitors that will wipe out SiriusXM probably were in grade school in 1997 to 2000 when Internet startups were raising hundreds of millions of dollars at the drop of a hat to develop internet businesses built on fluff and promise. All but a few evaporated. A few like Amazon.com barely survived before they got profitable enough to grow on their own. Businesses today, built on a concept of "free applications" or "free services" are doomed to walk the path of the worst dot.com failures of 2000-2001.

  • Report this Comment On January 10, 2011, at 2:36 PM, wrigmar wrote:

    Hey Anders - I will make this simple for you, as you are obviously a major simpleton. Can a person get FREE drinking water anywhere they want????????? Then how in the heck do bottled water companies stay in business? Can anyone get FREE cable TV????? Then how do cable and satellite companies stay in business?? You are completely devoid of any common sense, let alone literary prowess. Find another place to hang your hat, as writing articles is clearly not for you. Unless you start writing for a comic strip, because you truly are a joke.

  • Report this Comment On January 10, 2011, at 2:44 PM, toomany4gong wrote:

    Dumb and dumber.

    Period.

    SIRI = $100 stock. Get in now or forever regret.

    Strong Buy, Too Too Toooooooooo Strong!!!

  • Report this Comment On January 10, 2011, at 2:44 PM, wrigmar wrote:

    Anders,

    One last thing. That short position is really starting to hurt, isn't it.

  • Report this Comment On January 10, 2011, at 2:59 PM, ghostintheattic wrote:

    Pandora is free? Since when is bandwidth free? The bandwidth charges for Pandora in a vehicle would easily exceed the cost of a Sirius XM subscription. Additionally, internet radio is subject ot the recent net neutrality rulings.

    This article sounds to me like the opinion of someone who starts witha premise and selectively looks for "facts" to support the premise.

    The future of satellite radio is far brighter than the future of internet radio. Try to keep up.

  • Report this Comment On January 10, 2011, at 2:59 PM, GeorgioG wrote:

    All I have to say is sat 2.0 ! Coming soon to a radio near you .....Game, set and match!!!!

    So I guess you are telling your readers to short sirius, because you are soooooo sure the business model is doomed.

    Let's see who is smarter and richer come 1-10-12

    1.5850 2:58 1-10-11

  • Report this Comment On January 10, 2011, at 3:04 PM, Cool700 wrote:

    At 10 cents per Megabyte, it will cost a wireless internet radio listener about $2.10 per hour to listen to the radio. A hour a day......$63 per month, essentially 4 times the SiriusXM charge for unlimited listening.

    Car companies will not want to rip off customers!

    Pandora will cease to be installed in cars very shortly.

    The connection 3G, 4G, WiFi in cars is what will cost Pandora users more money than SIRIUS XM.

  • Report this Comment On January 10, 2011, at 3:10 PM, Streamlined wrote:

    Siri nut job longs don't want to hear the truth or the future. They only care about themselves and their stock. I had Sirius, switched to my Ipod and now for the same price as Sirius service, I buy 13 songs a month and listen to EXACTLY what I want instead of a loop of crappy songs. I found myself channel surfing just as much on my Sirius radio as I did on terestrial radio.

    And by the way, most longs didn't want Howard to come back or they said they didn't care either way, but now it is a perk? Howard is old and played out. Cash in your $2 stock, enjoy your profits and quit crying like little school girls.

  • Report this Comment On January 10, 2011, at 3:14 PM, kmacattack wrote:

    Waterinfo, Thanks for the GOODinfo. I downloaded Pandora last night, tried to build a playlist based on my preferences. Pandora is better than terrestrial radio music stations, I believe, if for no other reason than the commercials time is much less than TR, and you can have SOME additional control over your music selections, but their computer kept playing songs that I HATED PROBABLY 75% of the time. You can skip the songs, for a little while, then a popup appears saying that "due to their agreements with vendors", you can only skip so many songs and you have to keep listening to stuff that you hate. I left the computer for about half an hour, and there was a message on my screen asking basically "are you still listening, because if you aren't we want you to log off because every song costs MONEY, and you aren't sitting here listening to our commercials." Can you say MICKEY MOUSE?

    I've owned stock in SIRI for about 8 months, have made a ton of money on it, getting ready to buy more and sell a put on the pullback, because it's about to take off again. Brandon Matthews of Satwaves posted an excellent article this weekend with reasons why SIRI is going to skyrocket. When they hit $1.87 (not far off at the rate it has climbed, and with more and more people becoming aware of the SIRI turnaround story). I've been to several restaurants lately that play SIRI as background music, and the content and programming is SUPERB. I suspect Pandora is funneling songs they can find with the cheapest royalties into your "station." And I didn't find Howard Stern, or any of the talent shows on Pandora, nor could I find any NFL games, Major League baseball, etc. Pandora is like comparing a local low budget UHF station which runs cheap programming to a pay service like HBO, where you don't have to wait 10 years to see a good movie after release, and you don't have to sit through an hour of commercials to watch a heavily edited film.

    Anders evidently has an axe of some type to grind regarding Sirius SM. His entire article is completely negative, ignoring all the great things happening at SIRI, things such as achieving 10 percent penetration of all the cars on the road, which will create a snowball effect from now on, just like radio 80 years ago, then car radio, then tv, color tv, VCR's , CD players, DVD's, Flat panel TV's, Microwave ovens, toasters, washers, dryers, refrigerators, etc. All these items experienced explosive growth once the 10 percent threshold was reached. The company is now starting to make A LOT OF MONEY, because they have the fixed costs covered already, and the cost to add new subscribers is very low from now on. Siri is expanding into Mexico, Asia, Europe, etc., and has agreements with India's TATA motors, manufacturer of the world's cheapest car, at less than $3,000, in a market of about 2 billion people. All SIRI would need to do to CRUSH PANDORA would be to introduce a free commercial sponsored service, which could feature much more limited programming , but would still be a Mercedes compared to Pandora's Yugo. Pandora, by the way, does offer a "premium" package, which of course you have to pay for. If you want nice fresh oats, you have to pay a little more than those oats which have already been run through the horse.

  • Report this Comment On January 10, 2011, at 3:25 PM, shuze2 wrote:

    wow, there's free water? no more bottled water for me. free cable? cancel my directv subscription. free movies at the library this weekend? my netflix account is history! ipods for all my musical needs? why didn't i think of that! i can't seem to find my sports on my ipod, but i'm sure they're in there somewhere. the world of sirius shorters is a magical free wonderland! you won't be able to get what you want when you want it, but it's free! free! freeeeeeeeeee......

  • Report this Comment On January 10, 2011, at 3:32 PM, mlrinc10 wrote:

    Anders, you definitely need to meet Alyce (sirius lump of coal article). You two would make a great couple; especially in the intelligence department.

  • Report this Comment On January 10, 2011, at 3:39 PM, yardbird1 wrote:

    I listened to pandora for about 3 weeks.Thought it was a great idea.

    .Daily.

    Loved it for about 5 days then heard the same songs over and over and over and over again..

    DId they upgrade their algorithm?

    I really don't want to hear the same song 3 times in one day.

    If that is not a big deal, then its a great service as long as you don't have buffering problems.

    In fact ,if neither of these is an issue, which i can understand, I think slacker is the better service by far.

  • Report this Comment On January 10, 2011, at 3:47 PM, lockie7 wrote:

    The write is so bias he obviously has a axe to grind, sad sick little fellow who won't or can't write an objective article. Don't send me anymore of your spiteful opinions.

  • Report this Comment On January 10, 2011, at 4:03 PM, ItAintCool wrote:

    The idiot "Pandora is the Sat Radio Killer" twins (Alyce Lomax & Sean Williams) have now become triplets.

    It seems that the strategy for bashers to attack SIRI has changed tactics.

    Can't attack them on Stock Price (it's almost tripled in since the start of 2010).

    Can't attack them on lack of subscribers (the company has exceeded 20 million subscribers and it continues to grow).

    Can't even attack them on debt (Since they have made incredible strides to pay down their debt and refinance their interest. So much so, the credit rating companies have improved their credit rating constantly and consistently over the last 2 years because they are confident they will easily pay off whatever debt they have.)

    So what's left? The number of diluted shares? Not the best argument to use when the SP has made a 150% gain in the past year. It's easier to bring that up when the stock is on a spiral down.

    So when you're a MF commentator, one who may have been so negative on SIRI that they foolishly missed the ball for the last 2 years and looked very bad in their supposed wisdom. Missed up to a 3,600% return opportunity on the stock, depending on when you bought in over the last 2 years. So what do you do to attack a stock that you've been wrong on for so long, when all the signs point to its success?

    Hey I got it! Let's pump Pandora and Internet radio as the next "Great White Hype!". Let's ignore that they don't have a viable business model. Sure their start-up costs are low, but how can growth be sustained when people aren't paying subscribers? Ad revenue? They make far less in ad revenue than SIRI and that is just a drop in the bucket. And because we don't want Internet Radio to look bad, let's ignore that net-neutrality laws have and will continued to be tossed out by congress making streaming radio in your smart phone very expensive unless you've got an unlimited data plan. And even with unlimited data plans, the lack of net neutrality will allow the wireless carriers to shut off streaming radio apps that aren't paying them fees to carry their content on their service.

    Remember how great Napster was when everybody used it because it was "free"? Remember how it tanked when it became a paid and regulated service because the government ruled against it? That's what Pandora is. It can't sustain itself as a free service indefinitely. And the government has already put the choke-hold on its ability to be received on wireless carriers without some price to be paid. Whether that comes from Pandora passing the surcharge to customers in order to get unrestricted access to the wireless phones or simply the wireless carriers charging their customers for taking up so much data bandwidth, people will exodus from this great free internet radio service when they realize they're paying more than the $13 a month SIRI charges. Meanwhile SIRI will continue to add subscribers as the service is standard equipment in more and more autos (Thank you Nissan!). And for those who missed the news, SIRI can now broadcast their services to Alaska and Hawaii. Imagine how many more subscribers will be looking forward to finding better content than the limited number of terrestrial radio stations they can get in those states.

    Those who wish to cash is at $2.00 can do so. I'm sure you'll have made some money if you bought in in the last 2 years. But then you'll miss the boat when the stock is at $3.50 before the end of 2011 and over $5.00 by early 2012. I bought Netflix at $15 and sold at $27 thinking I made a nice profit. Now I think what and idiot I was for not staying long on the stock. I'm not making that mistake with SIRI. I do take profits out of SIRI from time to time. But then I buy in again when the stock dips and make even more $. Now I'm just playing with the house's money.

    Just remember, Anders Byund, Alyce Lomax & Sean Williams have been consistently wrong about SIRI for 2 years! Would you put your trust in a stock broker who steered you away from a 35 - 36 bagger stock that everybody else has said to buy? So why believe these fools now? It's one thing to be wrong on a stock and realize that you made a mistake and change your opinion. But to be wrong and then be obstinate about being wrong for over 2 years can be defined by one word, "stupidity".

  • Report this Comment On January 10, 2011, at 4:10 PM, rayzur9 wrote:

    I tried Pandora, and here is what I thought.

    Setting up my own stations by songs/artists, still leaves me wishing for more content, instead of having to "set it up". There ARE commercials about 1 for every 4 or 5 songs played. The attempt the Pandora makes at finding music somewhat like what I set up a station as, falls short of the word relevant. SKIP that song it sux, OH skip that one too, Wait, you cant skip anymore songs. Well, The interface is not something I enjoy obviously, and so, I still believe Sirius to be the best in content and delivery.

  • Report this Comment On January 10, 2011, at 4:12 PM, beerman53 wrote:

    Re: Streamlined

    Choice is always there. You... prefer not to spend your hard earned dollars on things like Sirius. , Fine, But you buy your tunes and run the Pod for the very same reason people who have lots of wheel time and love sirius do. Content without commercials.

    I can see if your spending 30 pelts a month on unlimited data for now , why not run panda tunes at random with commercial breaks. From my seat that sounds like your spending money on what you could get for free by turning on the radio. Lets also not forget that Panda is already on the the subscription game anyway. 10 pelts a month for selection oriented playlists.... Hmm that sounds like a pay radio. Outstanding , just don't move to fast though rebuffering is a pain

    Sirius is a strong company if you do have a sub you can stream it on your phone also and without commercials, awesome.

    You have your pod. I have mine.

    this does not a bad co make

  • Report this Comment On January 10, 2011, at 4:17 PM, SiriusFun wrote:

    Streamlined,

    This is the second time I've seen this so I guess you really did post, "I buy 13 songs a month and listen to EXACTLY what I want instead of a loop of crappy songs" Are you seriously comparing buying 13 songs/month for the same price of the content delivered by Sirius every month??? About 150 channels of music, sports, news, Howard, etc??? 13 songs???!!!! You have to be kidding me. Betcha don't get tired of listening to those babies.

  • Report this Comment On January 10, 2011, at 4:30 PM, ItAintCool wrote:

    Anybody notice that Anders just edited this article within the last hour. He removed the line where he told people to sell this stock for $2.00 and get out!

    He's afraid! He's afraid when the stock price goes well over $2.00 and we laugh in his face for telling people to sell SIRI at $2.

    Don't worry Anders! We'll always remember what you wrote, even if you're hiding it now. I'll be rubbing it in your face as the stock breaks beyond $2.00.

    You couldn't even have the courtesy to note that you edited your story to remove the quote. What's the matter? Afraid you shot off your mouth too much. Come on, care to admit you made a mistake?

  • Report this Comment On January 10, 2011, at 4:38 PM, baldheadeddork wrote:

    "To model this, I looked at AT&T's high data usage model, which is $35/month including the first 200 MB and $10 for each 100 MB thereafter. After the base usage, capacity is thus priced at 10 cents per megabyte."

    AT&T charges $25 for 2GB, not 200MB. 2GB equals 2048MB. $25 divided by 2048 is 1.2 cents per MB, not ten.

    The charge for using more than 2GB is $10 per additional GB, not 100MB. The cost is 0.98 cents per MB.

    http://www.att.com/shop/wireless/plans/data-plans.jsp

    It does not cost $7 an hour to listen to Pandora on AT&T. Never has, probably never will.

  • Report this Comment On January 10, 2011, at 5:11 PM, trucker10 wrote:

    One has to wonder whether this guy short Sirius or is being paid by someone who did. His claim is so ridiculous I don't know where to start. Ok first of all this clown is ignoring that traditional AM/FM radio is free and has been free during Sirius' entire existence. Despite it being free 20 plus million people are Sirius subscribers. This alone proves his nonsense wrong that free alternatives mean Sirius will soon lose all its subscribers.

    Pandora is little better than traditional radio, it offers the ability to listen to traditional radio stations basically. It jumps around between radio stations throwing commercials into the mix just like ordinary stations. Frankly some of my favorite radio stations do a better job of mixing songs than Pandora. Pandora's similar music function inevitably plays artists and songs I hate. When that happens with traditional radio you just flip the station, with pandora you get limited skips and are forced to turn it off and go with traditional radio to escape from songs you hate.

    Even if by some miracle Pandora reception becomes as reliable as traditional radio that still doesn't help change any of the problems I just described. Note that until now I have not even mentioned the reception reliability issues. Then there is the problem of using up precious phone minutes...

    Why do people like Siruis? The lack of commercials and content. Yes the content is the key. The ability to listen to ans sports you want and to flip among so many stations with original content is a big plus. When something is on you don; liek there are a ton of other choices. Reception is stellar (punn intended).

    The bottom line is simple, despite Pandora and traditional radio being avaiolable millions keep choosing to instead pay for Sirius. There is litle Pandora or traditional radio can do to change that and get people to stop subscribing anymore than NBC, ABC, and CBS television networks are going to drive the vable stations and networks out of business. Content and variety is what drove cable despite the free networks and that is what continues to drive cable.

    Those claiming people are suddenly going to give up content to just be stuck with traditional radio or worse Pandaor whic is even inferiro to traditional radio are simply being dishonest and have ulterior motives.

  • Report this Comment On January 10, 2011, at 5:24 PM, Brent2223 wrote:

    Bearish SIRI articles are the best bullish indicator out there, in my opinion. Tells me there are still some nervous shorts out there. Love the parting words, if I may paraphrase, don't buy SIRI cause someday someone will invent something that's better. Enjoy waiting on the sidelines until we're all flying around in cars that read our minds. Me, I'll be investing.

  • Report this Comment On January 10, 2011, at 5:57 PM, waterinfo wrote:

    Baldheadeddork-

    The link that you quoted to AT&T's rates shows either 200 MB for $15.00 (after base usage) which is 7.5 Cents per MB, or if you make a bigger committment and get the 2GB base plan the cost is 1 GB for $10 after base usage (or 1 Cent per MB).

    If the incremental cost is as low as 1 cent per MB then it will cost between 21 cents and 70 cents per hour to listen to Internet radio. This of course, is in addition to the $15 or $25 per month for the base data subscription.

    Let's say it's only and incremental cost of 21 cents per hour. 2 Hours per day, 30 days per month, that's 60 hours per month which will cost $12.60 per month, just about the cost of the SiriusXM subscription.

    Now of course, realize a few other things.

    1. AT&T's current rates do not include the impact of the recent net neutrality rulings. The are far more likely to rise than to fall.

    2. Dorks like me (and despite the large number of Dorks like you there are still more people like me) manage to live with out a live internet feed 7x24. I manage to survive on a pretty basic cell phone, and would never spend money to put music on my cell phone for $15 or $25 per month, plus usage fees, when I can listen all I want to for $13/month on SiriusXM.

    3. Even if Internet audio was totally FREE, it is worth even more than $13/month to get the breadth and depth of programming that is readily available on SiriusXM compared to the free feeds from the Internet.

  • Report this Comment On January 10, 2011, at 6:41 PM, baldheadeddork wrote:

    Waterinfo -

    If you're going to do _any_ streaming on AT&T you need to choose the $25/2GB plan. The 200MB plan is good for websurfing and email, but that's it.

    But please remember - despite near universal predictions that AT&T's tiered plan would cause the rest of the telcos to follow suit, that hasn't happened. For everyone not on AT&T, it's ~$35 a month for all the data you can use.

    How much bandwidth does streaming audio use in a month? From a usage calculator on AT&T's site, the answer is "not much". You can stream audio 40 hours a month, which would cover a two hour daily commute, and still have enough bandwidth left for 1,000 emails, viewing 3,000 web pages, downloading ten songs and posting 300 pictures to Facebook.

    I'll put the link at the bottom, and I encourage everyone to play around with it. Because it shows in a succinct way that audio streaming simply isn't a bandwidth-busting application. I have an iPhone and I listen to streaming almost constantly while driving to job sites, and I've never come close to using more than 1.5GB in a month.

    As Anders tried to get across here (and I wrote a couple of weeks ago) the threat to SIRI isn't from a smart phone. That's just the delivery device right now. We are now officially less than a year away from car makers offering streaming applications and the bandwidth to get it as part of the radio/nav package. It is coming, and the price of the 3G/4G network access for these apps is low enough that it can be priced into the car.

    Some consumers will keep SIRI because they like their exclusive programming. But when this arrives, SIRI is going to have to compete with sources that allow the user to configure what they want to hear. That's a very compelling case, especially if there isn't a monthly subscription fee.

  • Report this Comment On January 10, 2011, at 6:41 PM, baldheadeddork wrote:

    Here's the link to the AT&T usage calculator:

    http://www.att.com/standalone/data-calculator/index.html?wtS...

  • Report this Comment On January 10, 2011, at 6:54 PM, shuze2 wrote:

    "Some consumers will keep SIRI because they like their exclusive programming"

    some? "some" is spelled a-l-l.

  • Report this Comment On January 10, 2011, at 8:00 PM, JPDemers wrote:

    The endless blather about SIRI is very much like the blather about Apple: people who use Macs "get it", and those who don't, don't. Those who don't then proceed to bash Apple and the Mac: "The Mac is too expensive!" "Windows XP is just as good!" "Windows Vista is just as good!" "Windows 7 is just as good!" (My favorite don't-get-it rant: "I would never use a Mac!")

    Meanwhile, of course, Apple makes money hand over fist, as do Apple's shareholders. (And the more they make, the more hysterical the bashers become: "I lost my shirt shorting Apple because of all you idiot Mac lovers!!!")

    Same with Sirius: those who have it, "get it." Those who don't, don't - and because they don't, they short SIRI, and then they get their asses handed to them, and then they whine about how those 20 million (and counting) idiots are making them lose money and look stupid. And they latch on to the SIRI-killer-of-the-month, the same way the Apple-bashers latch on to the latest Mac killer, iPhone killer, i-Pod killer, and/or i-Pad killer.

    Satellite radio is like the Mac: you turn it on, and it just works. No downloading, no ripping, no futzing, putzing or tweaking your faves for hours at some website merely to get a limited selection of music. Instead, you get lots of choices, tons of music, plus NPR, plus sports, plus 57 varieties of talk radio, all there 24/7, all at the push of a button, all for a paltry $.50/day -- which is almost certainly the cheapest of all your monthly expenses. It's a no-brainer, and a brilliant investment ... for those who "get it."

  • Report this Comment On January 10, 2011, at 8:20 PM, JPDemers wrote:

    "SIRI is going to have to compete with sources that allow the user to configure what they want to hear."

    Kinda like Apple has to compete with PCs that the user has to "configure" to do what they want to get done. Yeah, that's a worry. LOL.

    Three key points: (1) Who the hell wants to "configure" their freaking radio? (2) Hearing only what you want to hear makes you retarded, and (3) All that stuff that you think is all you want to hear ... where did you hear it first? Pandora is never going to lead you to Leonard Cohen, or Stephane Grappelli.

  • Report this Comment On January 10, 2011, at 8:32 PM, baldheadeddork wrote:

    Yeah JPDemers - who wants choice? That cable TV thing is never going anywhere. Rabbit ears and three channels is good for you!

    (And, not exactly the argument you should make for defending a satellite radio service that boasts about its hundreds of channels...)

  • Report this Comment On January 10, 2011, at 9:13 PM, baldheadeddork wrote:

    Oh JP - I just saw you're earlier brilliance comparing Sirius XM and Apple. If you're a troll, bravo. Brilliant.

    But if you're serious...yeesh. Just looking at the financial side these two companies could not be more different.

    Apple has zero debt, a few billion in the bank, 22% net profit margins and a price to earnings valuation of _only_ 22.

    SIRI has billions in debt, $390m in cash, millions of outstanding stock warrants to dilute the value of existing shares, a net profit margin below 10% - and a price to earnings valuation of 67:1 That's three times greater than AAPL.

    Apple has about a quarter of the smart phone market in the US and Europe, selling over 80 million iPhones since the launch five years ago. Apple has roughly ten percent of the personal computer business. They also make a lot of money as a retailer of computer and phone accessories, and as an online retailer of music, books, movies and software.

    Sirius XM has twenty million paid subscribers for its satellite radio service after a decade. That's it.

    If you get SIRI as a subscriber, enjoy. But comparing it to Apple in any way is preposterous.

  • Report this Comment On January 10, 2011, at 11:38 PM, waterinfo wrote:

    Baldheadeddork-

    If you're so smart, how many Apple shares did you buy in 1985 when it was $1.84 per share, or even in 1997 when it was under $5.00.

    I don't think that you would have predicted a price in 2010 of over $300. It was the uniqueness of their product that propelled their value.

    SiriusXM not only has a unique product, but 100% share of the satellite radio market.

  • Report this Comment On January 10, 2011, at 11:40 PM, waterinfo wrote:

    P.S. Above price for Apple shares have been split adjusted.

  • Report this Comment On January 11, 2011, at 12:31 AM, shuze2 wrote:

    hey baldie, you got it so backwards. pandora is the free, commercial-laden rabbit-ear channel. sirius is hbo. any questions?

  • Report this Comment On January 11, 2011, at 6:17 AM, TMFZahrim wrote:

    @ItAintCool wrote:

    "Anybody notice that Anders just edited this article within the last hour. He removed the line where he told people to sell this stock for $2.00 and get out!"

    Ok @ItAintCool, that ain't cool. There is no edit, there was no "sell and get out" line, and I don't know where you get off spreading that kind of disinformation.

    I do mention an "inevitable death spiral" for Sirius, and I stick by that -- if Pandora doesn't kill it, then some other online service will. It's just a matter of getting the networking infrastructure in place, and then these alternatives become about as free and easy to come by as water or oxygen. Pandora doesn't do sport or talk shows but Shoutcast stations do and are equally cost-less. And I'm just scratching the surface here.

    Also, you Sirius fans like to bring up your 20 million listeners. Did you know that Pandora had 48 million as of last March and probably more now? As for high growth, the satrad guys started years before Pandora, which opened up in November, 2005.

    Anders (the guy who kicked a hornets' nest)

  • Report this Comment On January 11, 2011, at 8:12 AM, Pike1993 wrote:

    Anders,

    I have copy and pasted your articles and will be saving them to only quote you on them after siri takes off more then where it is now. We will see about this death spiral you predict....funny how many actual market analysts are predicting slow growth to aggressive growth over the next 5 years...... I have yet to read a credible analyst predict demise of sirius xm. And especially since sirius 2.0 will supposedly have increased functionality and even potentially support streaming video to your car.....the sky is the limit.

    I own 25,000 shares of sirius xm that I invested 2500.00 dollars in when SIRI was 0.10 cents a share. I have already made 16times my original investment, and when SIRI really takes off and I make a boat load of money, I will make sure to look you up on this board and respond with one acronym only....... LMFAO...... here's looking at you kid......

  • Report this Comment On January 11, 2011, at 9:19 AM, Brent2223 wrote:

    "Did you know that Pandora had 48 million as of last March and probably more now?"

    What does this number mean? People who are actively using the product, or people who signed up to see what it's about then never use it (like me!) As you don't deactivate a free service, subscriber numbers are useless unless you elaborate on what they mean.

  • Report this Comment On January 11, 2011, at 10:03 AM, shuze2 wrote:

    anders,

    you still don't get it regarding content. there isn't something that's "like" the nfl, or stern or the other professional sports, or stern, or dr laura, and on and on and on, that will do as a substitute. don't they have cable tv where you live? is this that hard of a concept for you?

  • Report this Comment On January 11, 2011, at 11:36 AM, SiriusFun wrote:

    Anders,

    I'm guessing you're in your early twenties and thinks it's real neat to stream music over your smart phone. I thought the same thing 10 years ago when I could get Red Sox games on my pocket PC. Problem is that, despite the fact that it could be done, it proved to be a lousy way of doing it (i.e Pandora). Sirius offers tremendous, varied content with equally tremendous ease of use. Grow up and try to gain a little perspective before posting again. "Kicking the hornet's nest" is hardly useful information and, what you wrote, should have landed on the supermarket shelves next to the other tabloids.

  • Report this Comment On January 11, 2011, at 6:25 PM, ItAintCool wrote:

    Anders,

    I could have sworn that there was a line in your article where you called a $2.00 stock and that you told people to get out and then it disappeared. I may have paraphrased it. But if I was mistaken, allow me to sincerely apologize.

    Now let's talk about the 48 million Pandora subscribers you mentioned. There was one word you forgot to mention "paid" as in "paid subscribers". How many of those 48 million supposed subscribers are actually generating revenue for the company? Over 17 million people have paid to subscribe to SIRI-XM. It takes a good product lot to get somebody to get people to pay for something they already get for free (with commercials). But SIRI-XM is doing it. Pandora is hardly doing it.

    According to Pandora they made $50 million in revenue in 2009. Considering that a paid year subscription is $36, that means at best they have only 1.3 million paid subscribers (which is doubtful since that revenue figure also includes ad revenue). Now Pandora founder Tim Westergren also admitted that out of the total revenue generated they had to pay music royalties of $28 million. So all in all the company had $22 million in revenue after paying royalties. So then you have to deduct the company operating expenses? So how many millions of dollars do you think the company spent on operating expenses? While you don't have pay for radio personalities and rights to, news, talk-radio & sports broadcasting (which is one of Pandora's major flaws), Pandora still has to pay for day-to-day operations, management, sales staff. I'm sure this won't be as high as SIRI's day-to-day expenses, but 20 million a year in operating expense for Pandora is not impossible to believe. But let's low-ball it to say Pandora made 10 million in adjusted income. Wow! Compare that to the 2.53 BILLION Sirius-XM generated in revenue in 2009 and $463 million in adjusted income. And we all know that 2010 has been the first full year of profitability for SIRI-XM (estimates are 2.8 to 3 billion in total revenue).

    And lets not forget, Pandora doesn't count anyone who discontinues listening of their service. They believe that anyone who downloads their software is a listener for life, even when they stop listening. Sirius actually counts it's actual subscriber & churn figures (which is quite low for a paid subscriber service).

    You aren't comparing apples and oranges when looking these 2 companies. You are comparing a Ferrari and a Hotwheels toy (I leave it to you to guess which one is which). You can say that Pandora or another similar technology will be the demise of SIRI-XM, but the facts and figures say something else.

    No matter how many subscribers Pandora claims it has, if people aren't paying for it, it's worthless. Its ad revenue is not even reported, so my guess is that it is also minuscule. When Pandora or another internet radio company can make revenue and profits at the same levels of SIRI-XM, then tell us this is the death of SAT-radio. Otherwise this is simply pie in the sky, like so many internet start-up companies in the 90's.

    And you still haven't responded to the many people who have pointed out that with the lack of Net Neutrality, internet free radio won't be free for much longer.

    Brandon Matthews at SatwavesPro.com just came out with a column which really puts Pandora in its proper place. And shows the idiocy of people like Anders who claim internet radio is the Sat radio killer. Pandora is not competing against SIRI-XM. It can't. It doesn't have the diversity of programming and options that SAT radio does. And if you want commercial free music, you have to pay Pandora to give you that. What Pandora free internet radio competes with is free terrestrial radio, because both need advertising revenue to survive. Sirius-XM does not.

    Keep kicking the hornets nest Anders. You're the only one who is getting stung (along with any fools who believe you). SIRI investors are tasting the honey of huge returns on their stock.

  • Report this Comment On January 12, 2011, at 12:25 AM, JPDemers wrote:

    "comparing it to Apple in any way is preposterous."

    You're rather missing the point, baldie. I bought AAPL at $6.00, when it resembled SIRI rather more than it does today. That's the comparison I'm making, and it's the one you should be thinking about: SIRI at $1.50 is like AAPL at $6.00.

    What I look for is great products, potential for growth, and a pps that's low because (in my judgment) the analysts, bashers and shorts just don't get it. (FWIW, I bought NFLX for similar reasons.)

    SIRI has the additional attraction that new customers don't need new satellites or new content -- every new subscription fee goes straight to the bottom line. With fixed costs, linear growth in revenue eventually causes profits to explode, and it was clear to me that SIRI was about to arrive at that inflection point.

    If you disagree, that's OK ... after all, if everybody thought the same way I did, I wouldn't have been able to buy SIRI for anything close to my purchase price!

  • Report this Comment On January 15, 2011, at 2:02 PM, jm31563 wrote:

    SiriusXMheat, you said it well. Quality and offering of good content is what will win between these two companies. I'm not sure why this guy has such a grudge against SIRIUS becuase numbers don't lie-they are beginning to pay their debts down which is a very good sign of things to come. I will say this about Pandora and it's simple-I don't want to hear the same songs over and over, becuase terrestial radio already repeats songs in this manner daily. And the rebuffering...ugh! I'm sticking with my shares LONG in SIRI and will be buying more in the coming future. The best content wins and by the look of things, SIRI's got Pandora beat.

  • Report this Comment On January 16, 2011, at 2:25 AM, TMFUltraLong wrote:

    ItAintCool,

    I actually joined the writing staff recently, so I haven't had the pleasure of bad mouthing Sirius for too long but I will say this... If you bought Sirius at any point between 1994 and 2008....you lost money. It bled its shareholders dry in that time and its debt levels swelled dramatically. Explain what I'm missing here that makes this such an incredible buy?

    TMFUltraLong

  • Report this Comment On January 16, 2011, at 2:32 AM, warrenrial wrote:

    I believe Pandora will be a breath of fresh air.

    Tired of Howard Stern. Go Pandora.

  • Report this Comment On January 16, 2011, at 11:50 AM, NewSiriFan wrote:

    It would be nice if the banter regarding Sirius would be a little more civil.

    I'm a Sirius lifetime member, and now a share holder. I've also tried Pandora on my computer. I enjoyed what I've heard. I think it will compete with Sirius in the future. At some time not very, very long from now, cell towers will be able to stream a lot more data (5G or 6G). And, Sirius and Pandora will be just a couple of the players. There will be room for everybody. DirectTV hasn't killed cable. Sirius hasn't killed AM/FM. I didn't get Sirius for the music, but use it instead of FM when I listen to music now, because of the lack of commercials. I got it for listening to NPR because where I lived in southern CA, local NPR broadcast signals were weak in some areas. The channels I listen to the most on it now are the comedy selections, even though they repeat a lot of the same content currently. At home I pay for HBO and Showtime but, I watch cable news many more hours than I use them. It will be about content, pricing and the economy. Sirius will be up against it, but still growing. Perhaps think about Sirius like cable TV. Forty years ago a smaller percentage of homes were wired. We paid 7 bucks for cable then, My bill is 10 or 15 times that now, but I have DVR's. In the future, 10+ years from now all new cars will be "un-wired". Sirius, Pandora and unlimited other content providers will be available. I'm betting that Sirius will have a good deal of market share. If you live in a rural area, you won't be likely to have streaming data in your car. If you live in a rural area now, you use DirectTV/Dish for content at home. Sirius will have that market along with AM. Sirius will still be in Canada, now soon Mexico, then India, maybe China. I don't know what's going on in the EU or east of there. All of these services will have their market. When Pandora's IPO comes out I might be interested in it, we'll see. If you use it on your smart phone, they have great ad linking.

    Let me add to my forecast. I'm thinking Sirius will be taken private. Liberty Media bought 40% of Sirius at fire sale prices, bet they go for the rest of it after March, when their contract allows them to make an offer. They're probably in talks with Goldman right now arranging financing. Here comes a 4 or 5 dollar offer to buy my shares. A guy can dream.

  • Report this Comment On February 14, 2011, at 5:53 PM, BLKH2O wrote:

    SiriusXMheat

    Sirius/XMs growth has been spectacular during even these most trying times.

    ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

    Ah, let's see; SiriusXM 20M subscribers

    Pandora 80M subscribers

    SCOREBOARD BABY!

    Pandora will never be able to offer the choices of content…

    //////////////////////////////////////////////////////////////////////////////////////////////////////////////

    a company founded as a dot-com music sharing service has figured out how to leverage the platforms of the App Revolution to create a new market place with 80 million users and 1.4 billion stations.

    How many channels does Sirius have again? Oh, 130 channels. My, my, my that's a long way to catch up!

    Pete163

    These Jack legs hang in old dirty bathroom's just waiting for a chance to say something stooped.

    ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

    Pete163,

    Better to remain silent and have people think you a fool, than to post up on this board and remove all doubt.

    Itain’tcool

    Can't attack them on Stock Price (it's almost tripled in since the start of 2010).

    ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

    The stock price?

    Yes, it is almost half way back to where it was in 2008: $3.60

    I think Robert Duvall said it best in Apocalypse Now: "You want to wait here for the tide to come in?"

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