One of the nuggets during this morning's Sirius XM Radio
It's about time!
The App Store presence would not only be a welcome addition to existing satellite radio accounts, but also allow Sirius XM to reach out to radio fans who aren't active subscribers. The company would naturally charge those users a premium for access -- but investors should keep their enthusiasm in check.
Yes, having "Apple" and "Sirius XM" in the same sentence is exciting, but the grim reality is that few iPhone -- and even fewer iPod touch -- owners will pay to stream Sirius XM. After all:
- Music discovery sites like Pandora and Slacker have had free streaming apps for months.
(NYSE:TWX)AOL Radio offers a global smorgasbord of local radio stations.
- Last.fm, owned by CBS
(NYSE:CBS), offers a surprisingly deep catalog of genre-specific music.
- These portable devices have built-in iPods, so owners already have access to free podcasts, and they've likely loaded their entire music collections through iTunes.
- iPod touch owners can only stream when they are tethered to Wi-Fi connectivity, making it less likely for them to pay for a premium subscription service that only works in stationary conditions.
This is why the app's true benefit would be in keeping the company's churn in check. Subscribers would see more value in keeping their accounts active, given the multipurpose attraction of streaming online. That approach has worked swimmingly for Netflix
Sirius XM can use the extra carrot. Churn rates inched higher this past quarter, and new car buyers aren't paying for satellite radio once their free trials run out at the conversion rate they used to. The company has also been bleeding retail subscribers for a couple of quarters now.
The faltering economy can be blamed for the negative trends, so it's important to see if they reverse as the climate improves. Either way, having an iPhone app -- one that clearly will be quite popular -- couldn't come at a better time for Sirius XM.
More news than static on Sirius XM:
Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies in this story, save for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.