Apple (AAPL -1.17%) purchasing the Swell app, which has been described by some as "Pandora (P) for talk radio," puts another nail in the coffin of SiriusXM (SIRI 0.49%) satellite radio.
The Swell app, which was shuttered a few days after the Apple buyout in late July, offers a very simple interface that allows users to easily find podcasts. Much like Pandora, it delivers suggestions based on what a user likes. If I like comedian Tom Papa's podcast, perhaps it will send me to Jay Mohr's or bring up Doug Benson. The app unlocks a wealth of content -- a ton more than SiriusXM offers -- while making discovery easy. Swell brings order to the chaos of the vast podcast world, giving users easy access to thousands of talk shows.
Swell also takes away the advantage SiriusXM had in offering content via themed channels. With each station being curated by taste -- men's interest, left wing, conservative, etc. -- SiriusXM makes it easy to find shows. Apple has not done that. Its exisitng podcast app, which currently offers no discovery tools of any sort beyond raw search, is not well-liked and has a two out of five star rating in the App Store. Its deficiencies have helped keep SiriusXM in the game, but if Apple can integrate the Swell technology into a new app -- or its own -- the satellite company could continue its slide toward irrelevancy.
Why does satellite radio not matter any more?
Apple may not be specifically targeting SiriusXM as it works to make finding podcasts you like as easy as discovering music. But if the company can do that, it will strip away another thing that was once a selling point for satellite radio -- the idea that it's the best and easiest place to find great talk content.
When satellite radio launched in 2001, the formerly separate companies that make up SiriusXM offered something that could not be found elsewhere, and customers -- over 25 million of them at the close of 2013 -- were willing to pay for it. That willingness will go away as it becomes easier to duplicate or improve on what SiriusXM offers without paying subscription fees, which start at $14.99 a month.
In the early days of satellite radio, the companies were competing with traditional radio. In music and talk, Sirius and XM offered an impressive selection of music as well as more talk choices than could be found in any local market. The two satellite providers offered an easy way for a fan of an obscure musical genre or specific types of talk to get exactly what they wanted. As the companies grew through the early 2000s, they did so in large part because they filled a series of niches that terrestrial radio had left under-served.
By offering whole channels devoted to music from a wide spectrum of genres that were usually lucky to get an hour or two in a bad slot on traditional radio, the satellite companies built their subscriber base. They did the same in talk, with Sirius experiencing massive growth when it added Howard Stern in 2006.
Their advantage in music disappeared as customers began using services such as Pandora and Spotify to create radio stations specifically tailored to their interests. The free versions of those products offer a better experience than listening to any satellite radio channel because they allow customers to exclude things their taste suggests they like, but they actually don't.
In talk, however, SiriusXM has an advantage in that it not only paid for premier talents including Howard Stern, Opie & Anthony, and Christopher "Mad Dog" Russo, but it made them easy to find. All three had their own channels that aired content their fans were likely to like as well. Only a few years ago, the podcasting world was not filled with similar talents, and discovering new shows was, at best, a challenging prospect.
That has changed as an incredible array of comedians, talk show hosts, and other performers are now podcasting. It seems like nearly every major comedian has a podcast, as do traditional radio talents like Adam Carolla. Yes, Stern might still be a draw for his hardcore fans, but for general talk fans, the podcast world offers more than enough choices. If Apple can make it easy to find podcasts, then there is really no reason for music or talk fans to keep shelling out monthly fees for SiriusXM.
Is satellite radio dead?
In their day, Sirius and XM filled a number of needs. Technology has made most of those obsolete.
If Apple can successfully integrate Swell's technology into iPhones, then satellite radio's only advantages will be some good content, and the fact that streaming audio over a phone eats up data, which might give some users pause about streaming during their commutes. Even that advantage has been eliminated for T-Mobile customers since the company does not count most popular music apps in its data total for users.
Satellite radio has been replaced by free or cheaper services that offer more personalized entertainment options. SiriusXM's customer base may not have caught on to that, and there will be a learning curve that could last years as people learn how to stream audio in their cars. It's only a question of time, though, and the Swell acquisition could hasten the death of satellite radio.
