Today should be a dark day for XM Satellite Radio
One of the many new apps for the faster phones is the ability to stream music from Pandora.com, a rapidly growing music discovery site that streams music based on user preferences. It was a computer-based sensation before, but now the allure of smart Internet radio becomes accessible to new iPhone buyers.
Did I mention that the service is free?
That last point should send shivers down the spine of XM and Sirius, and it's a slap in the face to the FCC for taking nearly 17 months to approve satellite radio's merger.
I have always felt that criticisms of Apple's iPod (which the iPhone also happens to be) taking down XM and Sirius were unfounded. They are all growing, in part because they are replacing different car-dashboard appliances. The iPod is a CD killer, taking someone's music collection portable. XM and Sirius provide fresh content, coming at the expense of ad-saddled, territorially limited, and content-sparse terrestrial radio.
On-the-go Internet radio, in a device that's a no-brainer to be this summer's hottest gadget, won't help XM and Sirius persuade people to pay $12.95 a month for their own offerings.
There's no point in arguing otherwise anymore: XM and Sirius need this merger to stay alive. They need to realize the cost savings touted in the combination. If they haven't been able to turn a profit under previous rosier scenarios, it gets a lot harder today to stay competitive at a premium price.
I believe in XM and Sirius. However, I also believe that the medium's potential is based on realistic cost-cutting, coupled with carving out new revenue streams. Pandora is free, but it's also tied to selling tunes through Apple's iTunes Store.
Satellite is no stranger to commercial tie-ins. XM has been selling tunes through Napster