There's a secret weapon in XM Satellite Radio's
Affiliate marketing isn't a new concept. Heck, Sirius Satellite Radio
I Rep -- available through XMirep.com -- finds the satellite-radio provider hoping that its users will be the ones beating the promotional drum the loudest.
Simplicity has a price
The deal seems generous enough. It takes just a few minutes to set up an account. Members are then given a unique website address to which they can refer family and friends. Any eventual sales lead to a 20% commission. Taking advantage of the viral wonders of pyramid-like downlines, members get 7% of the action from anyone whom they encourage to sign up to be an I Rep, and they get 3% of any sales generated by folks one level below that.
A cynic would note that 20% of nothing is still nothing. The same math applies for those 7% and 3% downlines. Consumers have to flock to XM to make it work, and that just hasn't been happening in earnest lately. XM has had a tough time signing up new users at the retail level. It has also seen Sirius sign more net new subscribers for five consecutive quarters.
But wait a minute. Isn't Sirius about to acquire XM? Should XM really be trying this hard, or shouldn't it at least be allocating more of its on-air commercial time to paying third-party sponsors?
Not so fast, my friend. We all know that Sirius and XM have an uphill battle to climb to get their merger done. They are facing tough scrutiny from the same folks in D.C. who didn't let DirecTV
XM and Sirius are appearing all chummy these days. They're sharing books, handshakes, and possibly even content. But there's a good chance that this could all come undone in a few months. That would send each company back to the corner at the sound of the deal's death bell, instructed only to come back fighting.
It's for that reason that I'm glad to see XM isn't giving up its drive to grow its user base, even as it flies its "Save Us, Mel" balloon.
The sound of silence
Will I Rep work for XM? That really is up to the suddenly incentivized tenacity of its participants. It's a tribe that we don't know a whole lot about, because XM hasn't exactly nurtured its community. Like its 170 stations, it's been mostly a stream of one-way communication between the company and its users.
There's no social bonding or community-building at XMRadio.com. There are plenty of third-party sites where satellite-radio subscribers gather, but most of XM's 7.7 million subscribers aren't exactly rallying around the XM banner. It's a shame, because one would expect that more could be done to galvanize a community around specific stations. That's where I Rep comes in.
The next few quarters will prove challenging. Both companies are expecting to sign fewer subscribers this year than they did last year. The proposed combination also presents the perfect scapegoat, as the companies can point to merger-related confusion for any near-term weakness.
The market isn't expecting much. In fact, despite the initial euphoria after the deal was announced, both stocks are now trading for less than they did when the merger was first announced. Deal derailment and poor subscriber counts seem to be baked into both stocks.
So I Rep, even if moderately successful, can be a real difference-maker here. Look for your XM-subscribing buddy to hit you with a harder sell than usual. Expect webmasters to be as aggressive with XM as they have been with Sirius, if not more so, thanks to the beauty of the downlines.
Downlines during the downtime? Maybe that, in and of itself, is a good reason to remain upbeat.
Rick recommended XM to Rule Breakers subscribers in 2005, but the position has since been liquidated. A 30-day free trial subscription is available if you want to read up on the active recommendations.
Longtime Fool contributor Rick Munarriz is a Sirius and XM subscriber, but he does not own shares in any of the companies mentioned in this story. 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.