This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  )  moved higher on the week, inching up 0.3% to close at $3.28. The move fell short of the Nasdaq's 1.4% gain. 

There was more going on beyond the share-price gyrations, though. Sirius XM wraps up another of its two-week previews for dormant receivers. On the streaming front, Apple  (NASDAQ: AAPL  )  finally closed on a $3 billion deal for Beats Electronics and Beats Music, and sources say that Amazon.com (NASDAQ: AMZN  ) will be launching a limited streaming service at a tempting price point. 

Let's take a closer look.

Money for nothing and your clicks for free
We're in the second week of another Sirius XM free preview where it turns on the growing number of inactive receivers. Paying subscribers aren't likely to complain. Freeloaders are getting less than half of Sirius XM's channels, and the two free weeks won't likely be repeated for several more months.

This is a smart thing that Sirius XM does. It's easy to turn on the receivers, and any drivers that get smitten enough to come back as paying subscribers are incremental. The preview runs through Monday. 

We got the Beats
Apple announced the largest acquisition in its history, agreeing to shell out $3 billion for Beats Electronics and Beats Music. The premium headphone business is the bigger business, but the nascent Beats Music platform and the arrival of music icons Jimmy Iovine and Dr. Dre is what is more relevant to Sirius XM investors. Beats Music launched in January to plenty of fanfare. It's a Spotify-like on-demand premium service, but it raises the bar with celebrity-curated playlists based on a deep dive of various moods. 

Beats Music has attracted just 250,000 paying subscribers -- out of the 5 million that have checked it out -- but that's not necessarily horrendous for just four months of availability. Between Apple's CarPlay platform for in-car connectivity going into various car models and Apple's ability to serve up discovery music via iTunes Radio and now on-demand audio through Beats Music it does make Apple a triple threat to keep an eye on in the future.

Amazon gives away the store
Sirius XM investors know better than to worry about tech giants moving into streaming music. The SatRad star offers more than just tunes, and it's been able to keep growing despite the 2012 arrival of Xbox Music and last year's debut of iTunes Radio and Google Play Music All Access. However, Amazon could be a different beast. 

Five different music industry sources have confirmed to BuzzFeed that a Prime music service will roll out in either June or July. The catalog will be restricted to songs and albums that are at least six months old, but streaming will be available at no additional cost to the Amazon Prime annual memberships that they are already paying for. The inability to access new tunes will be a deal breaker for some, but it's hard to look this gift horse in the mouth. This will definitely be something for Sirius XM investors to watch, especially if it includes seamless Bluetooth mobile connectivity.

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Comments from our Foolish Readers

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  • Report this Comment On May 31, 2014, at 11:37 AM, sirifair6 wrote:

    Rick,

    It is true that the music streaming market is getting crowded… but not the RADIO market. Let us not forget that sirius xm is a radio company with its independent and very dependable ground and space infrastructure and that both its and its customers costs are FIXED. They are not subject to the mood of providers and have a tremendous negotiating clout with content providers. On top of that auto companies have vested interest in siri's success due to revenue sharing.

    The market cannot sustain too many players in streaming and with time their number will dwindle to a few. In addition to that, music industry will keep pressuring pandoras and spotifies that "consume" a countless number of songs. Once these juke boxes start passing on their costs on their subs they are finished and this will help siri tremendously.

    Today siri has 60M+ sat enabled cars; in five years the number will at least double. By definition siri sub pool will grow healthily and with their scalable business model and relatively fixed cost structure and low customer fees (less than $15 per month) they can afford a lot including stifling their competition. I have no doubt whatsoever that the future is on their side. They are already prospering with estimated $1.1B fcf in 2014 that will double in five years. Mark my word!!!

  • Report this Comment On May 31, 2014, at 2:03 PM, zukerman wrote:

    sirifair6,

    Did you happen to catch the commercial advertizing that your dormant receiver is now activated and playing for a limited time? Nice to see that we are trying to get the word out.

  • Report this Comment On May 31, 2014, at 5:48 PM, dannysboy wrote:

    "Did you happen to catch the commercial, etc."

    Catch it!? I have been a siri subscriber and shareholder for 11 years and I'm trying to get away from the commercial.

    It runs so much I wonder if it isn't counterproductive. But those run in the past were frequent too. Hopefully, they are effective.

    We are going through another chapter of "killing SiriusXM" with Apple now.

    SiriusXM is the Encyclopedia of Broadcasting with a superior delivery system.

    I do a lot of mountain driving and siri, in rain, sleet or snow, always delivers. I don't know why but lots of snow has no effect on siri reception.

    At home, I have DirectTV and I have to go out and clean the snow off the dish to continue reception. Yet, my home siri radio suffers no impairment from snow of any amount.

  • Report this Comment On June 01, 2014, at 7:20 AM, zukerman wrote:

    dannysboy,

    Channel surfing and heard the words Sirius and activation on TV, some obscure station, but it was indeed there. We rabid followers should know these things, right? Been here since 2004 and been well rewarded for my time.

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