XM Tests The Internet Waters, But Why?

By | September 15, 2004 | Uncategorized

XM Satellite Radio [XMSR] now is looking at Internet users as the next source of subscribers to its commercial-free satellite radio service. XM Radio Online subscribers will be able to listen to XM’s music stations and a variety of other content for a monthly fee of $7.99 As a perk, current subscribers to XM’s traditional satellite radio service can subscribe to XM Radio Online for $3.99.

While having a solid source of commercial-free music and other content could be desirable, Satellite Today sees a couple of red flags regarding this service. First, one has to question why XM would seek more money from its existing subscribers just to get access to something for which they’ve already paid but over a different medium? Given the availability of in-home receivers for satellite radio, why would anyone who already is an XM subscriber want to pay for this service? We believe it could be an interesting marketing tool to introduce potential subscribers to XM and to allow them to see if the service is for them, but to ask existing subscribers to pay for an additional mode of access doesn’t make much business sense.

The other red flag has to do with XM Radio Online’s competitors: the plethora of free Internet radio stations. Given the fact that many Internet users consider music as something to be distributed for free over the Internet, XM’s premium service is going to be a hard sell.

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