Vegas Buzz

by James B. Wilson

Vegas Buzz Featured Columnist

 

It wasn't all that hard to figure out.

 

$500 million for Howard Stern (mostly cash, I understand, not those flimsy nebulous stock options), a cool half a billion, and he's set for life.

 

Sirus is not set for life, though, regardless of whether they have sleaze king Howard Stern on their side or not.

 

In fact, Sirus may very well be looking at an ever-shortening life span.

 

XM? Same deal. Oprah or not, the fact is, competition from other quarters - as in 'iPod,' and maybe even the iPhone, ultimately, is stiff.   Very much so.

 

Now how about subscribers? Let's take a look.  with barely 10 million subscribers between them, and growth slowing, both giants, not in market share, but in infrastructure and hardware, are floundering.  And that's really too bad.  They're big in size, but not in investor return, which continues to shrink as share values decline.

 

Let's also take a look at some of the trends Vegas Buzz spotted years ago, and sounded then like a lone faint voice crying in the wilderness:

 

Blogging. Podcasting. iPod over satellite.  And now, Video social networking ala YouTube, Google Video, Broadcaster, and now Vegas Buzz Video (www.vegasbuzzvideo.com)

 

This is one case where bigger, less efficient is not better, and certainly not profitable.

 

Meanwhile, iPod sales continue to be brisk, as well as music downloads from iTunes, which still maintains nearly 90% of the world music download share. Awesome, is the only word to describe it.  Absolutely awesome.  Singlehandedly the little iPod has loomed to become a real threat to conventional record retailers (i.e., Tower, Wal-Mart, and that ilk - all of which have pulled the plug on their music related stuff including downloading and dial-up Internet services - sounds almost stone age), conventional radio stations, and alas, satellite radio.

 

More and more new vehicles are being built with USB ports and accommodations for iPods and other music players.

 

Here's a small list:

Even the snooty luxury cars offer this high-tech wizardry.

 

Microsoft's getting in to the act with its mobile operating system for Ford-Mercury. 

 

The trend toward building in satellite radio may very well fade, although it did seem like a good idea in the beginning.

 

XM SIRIUS MERGER BOOSTS AUTOMOTIVE
RADIO ADOPTION; Cost Reductions Ultimately Benefit Car Buyer
http://www.mi2n.com/press.php3?press_nb=98013

 

The really bad news?  iPods are not going away.  

 

With nearly 100 million sold - at least 10 times as many as satellite radio receivers of the two satellite radio giants combined - And even if they did, people would still want to listen to other types of music players.  After all, who wants to listen to DJ banter in-between songs all over again?  That's what drove people away from conventional radio to Web radio and iPods in the first place. For most people, the concept of mix-and-match all your favorite songs and hear them whenever you want, in whatever order you want, is just too irresistible.  And furthermore, you can take your iPod and plug it into your dashboard in most USB-enabled vehicles.  The typical iPod with the ultra-super-compressed AAC format, can store anywhere from 120 to several tens of thousands of songs, in a very compact space.  It can also store all one's favorite podcasts, and with the Video Nano, several commercial-free, commentary-free seasons of your favorite TV shows.

 

Even worse news? Who really needs satellite radio for music? The main pitches of both XM and Sirius, especially to commercial  trucking fleets, has been the ability to keep listening to your favorite station no matter where you go in the country.  Good pitch, but flawed.

 

The real reason truckers need XM radio, is for weather reports and reports on load availabilities throughout the nation. It's really more of a commercial application, and for the tech-adverse (although nowadays the trucker's cab is really pretty high-tech), no downloading.  But most people have a teenager in the house that can put music on an iPod for you, so, probably not that much of a benefit.

 

Still, there's the magic of discovering new music, which is kind of what iTunes introduced the public to with its iPod and iTune store.

 

But few could argue that the iPod-iTunes combo isn't a formidable one that is ripping and tearing at the conventional wisdom of what music acquisition, consumption and enjoyment should be.

 

What can save these two companies?

 

They probably won't  listen, but we've got a few ideas.