The pending IPO by Pandora has gotten Wall Street fixated on Internet radio, so it’s hardly surprising that an analyst asked Mel Karmazin during his quarterly conference call whether Sirius XM might offer a similar service to compete with Pandora. The Sirius XM CEO isn’t ruling it out, but he’s not getting excited about the new competitor either.
“Without speaking specifically to Pandora, there’s an awful lot of IP audio content that’s out there and virtually all of them have a music recommendation engine or algorithms that enable you to sort of target a little bit more your channels. Most of those companies today, when you pick a cannel that you want, are limited by the number of plays that you can have of a single artist because of the digital royalties act. So we think that our channels, curated channels, are something that’s very desirable, so when you take a look at our time spent listening, which we do, and we compare it to the time spent listening of a lot of the IP channels, we see a greater satisfaction from our content,” Karmazin said.
“But having said that, certainly there is nothing that would preclude us from doing what you said in an IP part of the distribution that we give to consumers. So, clearly if in fact it was something that we believed that our subscribers would want, we would absolutely do that,” said Karmazin.
But in his view, Pandora is not really a direct competitor to satellite radio. “We think that there is an awful lot of people who like the Slacker, Pandora, Last.fm and iHeart services. It’s free. It’s really nothing, it’s really free because the way they make their money is they make you listen to commercials. And a lot of that IP content, as they get and try to get more and more revenue, are going to be running more and more commercials – and again, we like our business model, which is principally subscription-driven, as compared to the model where you’re offering the service for free, but then running commercials. It sounds an awful lot like terrestrial radio,” said the Sirius XM CEO.
By the way, Karmazin was talking about a price increase for satellite radio subscriptions in his call, so he’s pretty confident of his business model. Click here for the Q4 financial results from Sirius XM.
RBR-TVBR observation: Pretty funny to hear Mel badmouthing radio commercials, since they made him quite wealthy at Infinity/CBS. So, once wireless broadband in the dash becomes commonplace, will people still pay to subscribe to satellite radio to avoid commercials? Or is it really about wanting very focused genres of music, which they will gladly take for free with commercials? Mel thinks he knows, but we’re not so sure.