Sirius XM, the US-based satellite radio giant, doesn’t consider Spotify or other music services to be true competitors – and it’s stopped worrying about them.
That was the message from Sirius CFO David Frear speaking to investors recently, at a Bank Of America Merill Lynch event listened to by MBW.
Frear was questioned about earlier statements in which he’d said that terrestrial radio is the only real competition to Sirius, which attracted 27.3m paying subscribers in 2014.
“There’s not a second guy,” he said, referring to the competitive landscape in digital. “So it’s overwhelmingly AM and FM radio, and everybody else is so far down the list that it doesn’t matter.
“They’re all there [down the list], right? So Pandora is one, there’s TUNE-in, there’s a competitor in SoundCloud, Spotify… with Spotify it’s really more of the free version that competes with us [rather than] the paid version.
“And it’s all there, but AM and FM radio totally dominates the competitive landscape.”
There was one name missing of that list, of course – Apple Music.
Speaking ahead of the launch of the service, Sirius’s Frear was also asked his thoughts about Apple’s potential as a competitor.
“There isn’t anything distinctive about offering a music-based product. We worry about competition with a broader view of audio entertainment.”
David Frear, Sirius XM
“Well, you don’t look at the sideline to their core business, right?” he said. “So giving away music without attempting to monetise it in a big way has helped them sell other products that are more meaningful to them in their business.
“We’ll see if the post-Beats acquisition and post launch of [Apple Music] whether or not that changes in any meaningful way or if it continues to be just some sort of an adjunct service.”
Sirius XM offers three monthly subscription packages to consumers: XM Select (140+ channels for US $14.99 per month), XM All Access (150+ channels for $19.99) and XM Mostly Music (80+ channels for $9.99).
Frear added: “Somebody asked me this question earlier today, what’s really changed in the last three to five years?
“The last three to five years, I was really worried about these streaming services. And I’m really not worried about the streaming services anymore; they’re really focused on musical executions. I think that what makes Terrestrial Radio such a vibrant competitor is it’s music, talk, news, sports, traffic, weather, personalities that it there’s a lot there.
“If all you’re offering is music – music has global appeal, don’t get me wrong. Songs are great. But there’s an awful lot of people out there offering music. And so it’s a very crowded landscape, and there isn’t anything distinctive about offering a music-based product.
“So the competition we really worry about are the people that have a much broader view of audio entertainment than just music.”
Sirius was recently forced to pay the major labels plus Rolling Stones copyright holder ABKCO $210m in a joint settlement after playing tracks recorded before 1972.
The five-year contract of Sirius’s flagship DJ Howard Stern (pictured) expires at the end of this year.
Question: could Apple be interested in his services for a new Beats-branded radio station? One to watch.Music Business Worldwide