SiriusXM CEO Mel Karmazin doesn’t think much of the Pandora Media business model. Nor does he see the streaming audio company as much of a threat to his business. But since anyone who wants to can start a personalized audio service, he figures SiriusXM might as well get into the game.
Speaking at the Citi Entertainment, Media and Telecommunications Conference in San Francisco, which Pandora CEO Joe Kennedy had addressed a few hours earlier, Karmazin indicated that SiriusXM was preparing to roll out its own personalized streaming audio service, likely sometime this year.
“I can assure you that if our subscribers would like to have personalization we’re going to give it to them. So, you should assume, you know, that the idea of personalization is something that Pandora, Spotify and iHeartRadio and Slacker and all of these companies are doing – there is satellite radio and it will expand and make that personalization available, probably this year,” Karmazin told the investor conference. “I don’t think it’s a big deal. We’re not going into it as a business. We, again, like our business model. But we’re going into it saying, you know what, if our subscribers like that feature and they want to be able to customize content, we’re going to give them the ability to do that.”
The CEO insisted that the satellite radio company will continue to compete with terrestrial radio, “which we have done effectively for the last 10 years.” And he insisted that the SiriusXM business model, based on satellite delivery of subscription content, “is a better model that just IP delivery to a smartphone.”
RBR-TVBR observation: With, as Karmazin noted, no barrier to entry, it’s pretty easy to start a streaming audio music service that can be personalized by each user. You just need to spend some money. And we would note that the music royalties are always going to take a huge bite out of revenues – far more than for AM, FM or satellite radio – which argues for personalized streaming radio being an easier business proposition as one offering of a multi-faceted media company than as a standalone business.
If that thesis is correct, then iHeartRadio (owned by Clear Channel) and Last.FM (CBS) have the long-term advantage and standalones like Pandora are really being built to be sold to a larger media company.
Note: Coming soon from RBR/TVBR – Look for a focused/key Consumer Retail Report: Internet Radio, iHeart vs Pandora. One fact in RBR-TVBR consumer retail research findings – Pandora is not going to go away.
Jim Carnegie, Publisher Note: We can’t ignore the advances in the internet space. FYI: If you have never viewed our web portal – www.RBR.com – please do so because an Improved RBR.com web portal with a – Fresh – Reader Friendly Content Design – and a New ‘Information Bureau’ that will help every person in media today will be up in a few weeks.