Is Sirius XM Lactose Intolerant to Samsung's Milk?

Samsung's streaming music service is turning heads, but it's not swiping market share away from Pandora or Sirius XM.

Jun 2, 2014 at 11:07AM

These are interesting times as tech giants beef up their ammo in digital music, but one of the quieter assaults on industry leaders Spotify, Pandora (NYSE:P), and Sirius XM Radio (NASDAQ:SIRI) happened earlier this year when Samsung (NASDAQOTH:SSNLF) introduced Milk Music, powered by Slacker. It's been nearly three months since the world's largest smartphone maker rolled out Milk Music exclusively to Galaxy phone and tablet owners. The Internet radio packs some pretty sweet specs.

  • There are 200 genre stations, more than Sirius XM's receiver-based offering. 
  • The content is curated from a music library that is 13 million songs deep.
  • The service is also free and ad-free -- something that Pandora, Spotify, Sirius XM, and iTunes Radio can't offer -- for a limited time.

There are limitations, of course. It's only available for Galaxy devices in the U.S., but that is a pretty big market given Samsung's stateside success. There's also that tenuous asterisk behind the ad-free service. It points out that the ad-free streaming service is free "for a limited time" and that wouldn't be the case if Samsung was going to make this a permanent feature for Galaxy owners. Then again, it's been three months and Milk Music is still free.

Back in April there was some rumbling when an infographic blog post indicated that a premium ad-free service would roll out soon at $3.99 a month with ads introduced for the free service. Samsung went on to quickly remove that post, but it remains to be seen if it has had a change of heart or if it just showed its hand too quickly. Either way, the asterisk remains. 

The good news for the leading players of digital music is that they are growing in light of Samsung pushing Milk Music. Pandora's 75.3 million unique listeners at the end of February remained unchanged at the end of March and increased to 76 million by the end of April. Sirius XM closed out the first quarter with 266,799 more subscribers, and it expects to add nearly a million more net additions through the balance of the year. Spotify announced last month that it has topped 10 million paying subscribers, three times as many premium members as Pandora. 

It's against this backdrop that Milk Music is hoping that its relative value will make it attractive to Galaxy owners just as Samsung hopes that it's yet another distinctive feature to make it the top choice among Android devices. For now, there's clearly enough market for everybody to grow. However, Sirius XM investors will want to keep an eye on how subscriptions play out throughout 2014 as more Samsung owners begin using Milk Music in their connected cars. Sirius XM's top-notch programming makes it more than a mere music service, but the landscape grows more competitive.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Pandora Media. The Motley Fool owns shares of Pandora Media and Sirius XM Radio. 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. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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