The Big Picture: A Side-Effect of Auto Industry Woes

Monday, May 18, 2009
by Bobby Owsinski

A company and industry that’s being hurt badly by the auto industry’s financial problems is satellite radio and its only provider Sirius.

Sirius tied it’s growth almost completely to new car sales, and with car sales about as low as they’ve ever been in modern times, that doesn’t do much for subscriber rates. In fact, current subscribers are bailing as even $12.95 a month feels like a luxury to some.

Even if car sales pick up, and Sirius subscriptions with it, the company may still be in for long term trouble. Expensive satellites will have to be replaced (at about $500 mil each) and the credit market is still tight, not to mention that Wall Street was never enamored with satellite radio technology to begin with.

And has music industry consultant Ted Cohen states in my upcoming book Music 3.0 – A Survival Guide For Making Music In The Internet Age,GraceNote is working on some cool stuff with the car companies where the head unit on a 2010 car that will have a built-in 3G or 4G communications module so that wherever I am I can stream whatever I want whether it’s coming from Rhapsody or my home hard drive.”

If what Ted says is true, Sirius is a goner. The sad part is, I really do like what they have to offer, and listen whenever I’m in a rental car. But satellite radio ultimately might be one of those great ideas that is crushed by market forces before it had a chance to reach critical mass.

Sirius has one more trick up its sleeve though, changing it’s advertising to “Sirius Internet Radio” and delivering their products online and mobil. You’ve got to give them credit. At least they see the writing on the wall and are trying to get in front of it.

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Posted by Ted • Tuesday, May 19, 2009 .