US radios tremble before the digital ones
Entertainment In the USA, satellite radio is taking over from commercial stations - without advertising. Howard Stern is the enfant terrible of American radio.
Entertainment In the USA, satellite radio is taking over from commercial stations - without advertising. Howard Stern is the enfant terrible of American radio.entertainment In the USA, satellite radio is taking over from commercial stations - without advertising. Howard Stern is the enfant terrible of American radio. Because Stern has been repeatedly fined by the FCC for his crude remarks and drastic descriptions of sex scenes on air and will have nothing to laugh about for the next few years under the Bush administration, the self-proclaimed "S-hock Jock" has sought refuge with more friendly colleagues: the satellite radio station Sirius, which is currently expanding rapidly and recording annual growth rates of over 300 percent in both subscribers and revenue.
Until recently, few people thought it possible that media-saturated Americans would shell out extra dollars and pay twelve dollars a month for a radio service. But nationwide digital radio has something that many others no longer have: commercial-free airtime. Of the 120 digital channels on offer, all 65 music channels are completely ad-free, while the 55 talk and information channels feature sponsorship and the occasional commercial clip. What's more, reception is interference-free, even if you move across national borders with your satellite receiver in the car. "I'm a believer in the success of subscription channels," says Peter Fader, marketing professor at Wharton College at the University of Pennsylvania, emphasizing the success of cable and pay TV: "It always wins."
Lance Armstrong on SiriusSirius' competitor, XM Radio in Washington D.C., has a similar program offering. XM launched a year earlier, at the end of 2001, and clearly has more subscribers: 3.5 million for XM and its 152 channels, compared to Sirius' 1.5 million. Sirius recently catapulted itself repeatedly into the headlines by attracting more prominent names: superstars such as hip-hop celebrity Eminem and professional cyclist Lance Armstrong host individual broadcasting slots. Media star Martha Stewart will offer a listener-oriented lifestyle channel from the fall, and the car racing circus Nascar will be launched one year after Howard Stern, at the beginning of 2007. This move gives Sirius a head start in the two most important areas of the industry: "There are exactly two things that make a medium successful," says Jim Carnegy, editor-in-chief of the industry magazine Radio Business Report. "Content is king and presentation is queen."
XM is focusing more on innovative marketing deals to promote the brand and offer advertisers new sponsorship opportunities. Coffee house chain Starbucks, for example, launched its own music station called Starbucks Hear Music on the XM platform and will roll out its radio service to 4,000 US stores this year. The XM operator's logo will also be featured on coffee cups and brochures. "In the beginning, it looked like the trend would make it harder for advertisers," says Denise Garcia from research institute Gartner G2. "But on the contrary, it could become an interesting opportunity for them to create content that they can then sponsor exclusively." Both companies have signed exclusive deals with car dealers to install their equipment in the cars.
XM Radio has also concluded a cooperation agreement with AOL. Subscribers to the Internet service will be able to listen to XM Radio free of charge via the Internet. Those who do not use AOL will have to pay a small monthly fee. Marketing professor Fader is convinced that one of the great strengths of satellite radio is its diversity. "They even have channels for minorities, such as homosexuals," he says. "There are many niches and they will find them."
By cell phone or iPodThe fact that satellite radio could become a success is reinforced by the efforts of both providers to explore other platforms: in the foreseeable future, the digital channels should also be receivable by cell phone or portable digital audio devices such as the iPod. Even video streaming, which is primarily intended for the back seats of cars, is to be introduced. According to a study by the two research companies Arbitron and Edison Media Research, 14 percent of Americans already own an iPod or other portable digital audio device. The majority of them are under 35 years old. 36 percent of Americans say they regularly listen to the radio on the Internet. But this trend could also pose a problem for satellite radio: "Internet radio is becoming more and more popular, and if you can have radio for free via iPod, then satellite radio is in serious trouble," says Tom Taylor from the industry service Inside Radio. "It will depend on content. And who knows what will be invented tomorrow."
Gerti Schön
Until recently, few people thought it possible that media-saturated Americans would shell out extra dollars and pay twelve dollars a month for a radio service. But nationwide digital radio has something that many others no longer have: commercial-free airtime. Of the 120 digital channels on offer, all 65 music channels are completely ad-free, while the 55 talk and information channels feature sponsorship and the occasional commercial clip. What's more, reception is interference-free, even if you move across national borders with your satellite receiver in the car. "I'm a believer in the success of subscription channels," says Peter Fader, marketing professor at Wharton College at the University of Pennsylvania, emphasizing the success of cable and pay TV: "It always wins."
Lance Armstrong on SiriusSirius' competitor, XM Radio in Washington D.C., has a similar program offering. XM launched a year earlier, at the end of 2001, and clearly has more subscribers: 3.5 million for XM and its 152 channels, compared to Sirius' 1.5 million. Sirius recently catapulted itself repeatedly into the headlines by attracting more prominent names: superstars such as hip-hop celebrity Eminem and professional cyclist Lance Armstrong host individual broadcasting slots. Media star Martha Stewart will offer a listener-oriented lifestyle channel from the fall, and the car racing circus Nascar will be launched one year after Howard Stern, at the beginning of 2007. This move gives Sirius a head start in the two most important areas of the industry: "There are exactly two things that make a medium successful," says Jim Carnegy, editor-in-chief of the industry magazine Radio Business Report. "Content is king and presentation is queen."
XM is focusing more on innovative marketing deals to promote the brand and offer advertisers new sponsorship opportunities. Coffee house chain Starbucks, for example, launched its own music station called Starbucks Hear Music on the XM platform and will roll out its radio service to 4,000 US stores this year. The XM operator's logo will also be featured on coffee cups and brochures. "In the beginning, it looked like the trend would make it harder for advertisers," says Denise Garcia from research institute Gartner G2. "But on the contrary, it could become an interesting opportunity for them to create content that they can then sponsor exclusively." Both companies have signed exclusive deals with car dealers to install their equipment in the cars.
XM Radio has also concluded a cooperation agreement with AOL. Subscribers to the Internet service will be able to listen to XM Radio free of charge via the Internet. Those who do not use AOL will have to pay a small monthly fee. Marketing professor Fader is convinced that one of the great strengths of satellite radio is its diversity. "They even have channels for minorities, such as homosexuals," he says. "There are many niches and they will find them."
By cell phone or iPodThe fact that satellite radio could become a success is reinforced by the efforts of both providers to explore other platforms: in the foreseeable future, the digital channels should also be receivable by cell phone or portable digital audio devices such as the iPod. Even video streaming, which is primarily intended for the back seats of cars, is to be introduced. According to a study by the two research companies Arbitron and Edison Media Research, 14 percent of Americans already own an iPod or other portable digital audio device. The majority of them are under 35 years old. 36 percent of Americans say they regularly listen to the radio on the Internet. But this trend could also pose a problem for satellite radio: "Internet radio is becoming more and more popular, and if you can have radio for free via iPod, then satellite radio is in serious trouble," says Tom Taylor from the industry service Inside Radio. "It will depend on content. And who knows what will be invented tomorrow."
Gerti Schön
