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By Robert Garcia
As the nation’s premier public relations and strategic
communications firm specializing in radio, Strauss Radio
Strategies is keeping a careful eye on 2005, which
promises some very dramatic developments in the radio
business, including an evolving definition of exactly
what radio is. Almost every foreseeable change in the
industry is rooted, like dominoes, in the explosion of
satellite-delivered content from firms that are quickly
becoming household names, XM and Sirius. To be clear,
consumption of digital satellite commercial-free
programming is now being described by industry observers
as an outright stampede.
Here are some of the amazing numbers. As of early
January, XM Satellite Radio stands at 3.2 million
subscribers - double its audience from the start of
2004. The company predicts its subscriber base will
reach 5.5 million in 2005. Sirius Satellite Radio, which
got off to a much slower start, is gaining tremendous
momentum and its subscriber base stood at just over 1.1
million at the end of 2004, while it began the year with
only 261,000. Sirius is predicting that their audience
will double in size in 2005.
Helping to drive these ever-expanding audiences are the
relationships XM and Sirius have with major automakers
that are increasing offerings of their services in new
cars that roll off the lot. XM has an exclusive deal
with General Motors while Sirius has teamed up with the
Ford Motor Company, which has recently announced it will
offer the radio service as a factory-installed option in
four vehicle lines this summer, expanding to 21 vehicle
lines over the next two years. Ford predicts this deal
alone will provide another one million Sirius
subscribers over 2006 and 2007. Both companies have also
entered into agreements with Toyota.
On the programming front, there have been some dramatic
developments that have actually impacted both satellite
and terrestrial (AM and FM radio). Both companies have
made major personality acquisition announcements on a
regular basis - from former NPR Morning-edition host Bob
Edwards and shock-jocks Opie & Anthony to XM to Howard
Stern joining Sirius. And in a development that put the
entire business world on notice, Sirius appointed former
Viacom Chairman, Mel Karmazin, as its new CEO
late last year - nothing like landing a profit-oriented
Wall Street darling and successful visionary to get
everyone’s attention.
The digital satellite momentum is already dramatically
changing the traditional radio landscape and those
trends stand to continue in 2005. To compete against
commercial-free satellite programming, terrestrial
counterparts are reducing commercial loads wherever
possible and that’s evolving into a new advertising
model. Clear Channel’s 1,000+ radio stations, according
to industry sources, are scaling back ads and more than
making up for the revenue shortfall by moving to
30-second spots instead of the traditional :60’s, which
are only slightly more expensive. And they’re getting
more creative in offering clients premium packages that
allow specific placement of ads at the beginning or end
of commercial break segments.
Though still fraught with legal implications that can
add to costs (royalty payments), some stations are now
taking a second look at web-streaming as a way to
compete against the satellite radio phenomenon.
Web-streaming is potentially a huge draw for
office-workers who cannot receive quality signal
strengths in urban areas but can easily tune in to radio
programming from their internet-connected desktops and
laptops. It’s also a means of competing against the
innovative receiver technologies the satellite companies
are offering, such as XM’s portable player.
While the RadioLand Report has had several prior
articles on satellite radio, there is simply no way to
look ahead at 2005 without paying serious attention to
what is clearly now a revolution. How XM and Sirius
continue to innovate – and how consumers respond - will
tell the story of the changing radio industry in 2005.
The bottom line for consumers and for clients with a
product to sell or a message to deliver, is that there
will be more choices than ever before in 2005 as the
competition intensifies in our cars, our computers, our
homes and just about anywhere we go for the undivided
attention of the human ear.
Rest assured, as this phenomenon continues to develop,
we at Strauss Radio continue to increase and solidify
our own relationships with XM and Sirius to the
betterment of our clients. |
