Business Matters: SiriusXM Adds On-Demand Music and 600,000 Subscribers

by Glenn Peoples

SiriusXM Adds On-Demand Music and 600,000 Subscribers
— SiriusXM is the latest radio company to launch an on-demand service that allows people to listen to what they want, when they want. Well, sort of.

Launched Tuesday, SiriusXM On Demand gives SiriusXM Internet Radio subscribers the ability to tap into a catalog of more than 200 shows containing more than 2,000 hours of content. All on-demand features will come at no extra cost.

More on-demand content is on the way later this year. SiriusXM CEO Mel Karmazin said during Tuesday’s earnings call an Internet service that will deliver “expertly-curated music channels” is on target for a late 2012 rollout. He said the upcoming service is part of SiriusXM’s “Personalized Radio Project,” which sounds like SiriusXM is pushing to introduce something akin to the algorithm-driven, personalized Internet radio pioneered by Pandora.

SiriusXM On Demand will have such music shows as “Bob Dylan’s Theme Time Radio Hour,” “Tom Petty’s Buried Treasure,” select Jimmy Buffet concerts and items from the SiriusXM vaults. Subscribers will also have on-demand access to talk shows (“The Howard Stern Show,” “The Opie & Anthony Show”). On-demand programming will have “minimal” commercials while music programming will be commercial-free.

You may be asking yourself how a satellite radio company can offer on-demand music, talk and other programming. SiriusXM On Demand is available to subscribers to SiriusXM Internet Radio, the company’s online offering that can be accessed via the Web and a variety of smartphones, mobile devices and Internet radios. SiriusXM On Demand is currently available only on the Web and iPad, iPhone and iPod Touch.

On-demand content wasn’t the company’s biggest news Tuesday. SiriusXM announced record earnings of $237 million on record revenue of $838 million. Net income of $3.1 billion included a one-time income tax benefit of $3 billion. The company added 600,000 subscribers in the second quarter — up 38% year over year to 22.9 million — and increased guidance for the second half of the year. Karmazin said during Tuesday’s earnings call that SiriusXM should have 23.5 million subscribers by the end of the year.

The company’s stock was up 4.55% to $2.30 on Monday and is up 9.87% in 2012.

The combination of the new on-demand service and Monday’s positive earnings create an even more active digital radio market. SiriusXM On Demand is competing in the same arena as Pandora, iHeartRadio, Spotify and other online streaming services — it’s not always direct competition, but it’s competition.

SiriusXM needs to improve its service to hold off free, ad-supported alternatives such as Pandora. It gets most of its subscribers from automobile owners, which makes efforts to push the value of its online services all the more interesting. Setting aside the cost of the hardware, SiriusXM has a competitive price given its range of live and exclusive programming. Bolstering the satellite service with additional online service can only help.
( SiriusXM press release)

U.S. Music Biz Should Love Ziggo Muziek’s Business Model
— A music subscription service you’ve probably never heard of already has 350,000 subscribers, is launching in another country and has had strong subscriber acquisition success on a per capita basis.

Dutch ISP Ziggo has launched a music streaming service called Ziggo Muziek, a branded version of the white-label service WiMP. The service has roughly 350,000 subscribers and is also available in Norway, Sweden, Denmark and, as of May 2, Germany.

WiMP doesn’t get much attention on these shores but has a business model the U.S. music industry should love. Oslo-based Aspiro Music developed WiMP and provides it to mobile operators, broadband ISPs, cable TV companies and other entities as both a white label and a WiMP-branded service. Telenor, the world’s sixth-largest mobile carrier, is WiMP’s partner in Denmark and Norway. Canal Digital, Norway’s largest TV services company, offers WiMP in its TV subscription packages.

WiMP’s numbers are small by U.S. standards but it operates in relatively small markets. Its biggest market, Germany, has been in the WiMP family for only three months. It has only entered the Dutch market.

Getting 350,000 subscribers in Norway, Sweden and Denmark shows WiMP has a good approach. While these markets are digitally innovative and welcoming to music subscription services, they are also very competitive markets where services like Spotify also compete. So getting 350,000 subscribers through mobile carrier, TV and ISP partnerships seems like quite a success.

How successful is 350,000 subscribers in Norway, Sweden and Denmark (setting aside the two new markets)? The three countries have a combined population of roughly 20 million — just slightly bigger than New York State — giving WiMP a 1.75 subscription/population ratio. If that ratio were applied country the size of the U.S. (311.6 million) a music service would have 5.45 million subscribers. That’s more than Rhapsody, Spotify, Muve Music, Rdio and Mog combined.

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