Will Xirius be good for consumers?
Doc Searls points out some problems with the XM-Sirius merger.
1) Antitrust. There are too few companies — just two — in satellite radio here in the U.S.; and soon there will be only one. Imagine if one company owned the whole FM band. It’s like that. (Yes, I know Clear Channel sort-of does in many places, but what’s dead about terrestrial radio is not on the table here.) The only thing keeping this merger out of antitrust territory is the still experimental nature of the whole medium, and the fact that neither company as it stands is known for its profitability. (Sirius reported positive cash flow only late last year.)
All true to a certain extent, but the key with new technologies is that while they compete with one another, the most important competition is with the existing technology. Thus, even though you are reducing the number of competitors to one, the usual antitrust concerns don’t apply. Xirius can’t raise the price of a satellite radio receiver to $500 or increase the monthly rate to $50, because subscribers would just return to terrestrial radio or CDs or iPods. Consolidation might mean less innovation, but it won’t lead to any abuse of market power. It’s the same reason a merger of Dish Network and DirecTV wouldn’t really harm consumers (at least not economically). And to a certain extent such a consolidation helps consumers if it makes satellite radio a more effective competitor to Clear Channel.
2) Program quality. The new company will presumably encourage production of radios that receive both services, which will be nice. But what will lack of competition between Sirius and XM do for programming on either of the former sides? There may be more money to buy better quality talent or whatever; but I find it hard to imagine how a drop in competition will improve anything. Which brings us to…
Here Doc has a point. If XM and Sirius aren’t competing against each other, there will be a chance that programming will deteriorate (or at least stagnate). Thus far, however, the companies have only differentiated through exclusive deals. Want Howard Stern or NPR or the NFL? Get Sirius. Bob Edwards or MLB? Only on XM. As long as that is the case, consumers could still be helped by the merger. I like NPR and football, but hate Stern. So I get XM for the baseball and give up on the other two. With Xirius, I can get what I want. And if they introduce a la carte programming, I really get what I want. And the satrad company won’t cut back on programming; they need it to compete against terrestrial radio.
3) Monoculture. I don’t care how diverse the programming becomes, it’s still coming from too few companies. When the choice gets down to one, I guarantee that programming will have a homogenous quality to it. There’s already a self-sameness to both Sirius and XM, and that’s sure to be the case with Xirius or whatever they call the new company. And I say this as a generally pleased Sirius customer. At some point Xirius’ homogeneity will not compete against the absolute heterogeneity that listeners already find outside the walled garden(s) of satellite radio.
Maybe. I haven’t noticed the same homogeneity on XM, but maybe it’s just me. I listen to a lot of the news channels, sports radio, and a handful of music channels. If your listening habits are different, your experience may be different. Also, satellite radio homogeneity is nothing compared to terrestrial radio homogeneity. At least with XM, I can find a station playing something other than the latest American Idol wannabe and Justin Timberlake.
4) Obsolescence. When the two services started (around a decade ago), a total of 300 different “channels” (around 150 apiece) seemed like a lot. The program choices for listeners on either XM or Sirius far exceeded the sum of available sources from terrestrial radio. But now the sum of all program choices runs into the thousands or perhaps even millions. Yes, satellite radio is live while most of the other choices are just stored files; but files are easier to distribute and lend themselves to iPod-style listening. (On the “T” this morning here in Boston, I noted that a quarter of all the commuters in my subway car were listening to something on earphones. I’m sure it wasn’t radio — satellite or otherwise.) As Dave says, listeners want to program their own “stations”. Many listeners, which we used to call “consumers” are now also producers, for themselves and others. Where does satellite radio fit in that picture? I don’t think even Mel Karmazin knows. Meanwhile, the whole system continues to leverage an understanding of How Radio Works that is, to say the least, not current — much less future-proof.
This will be true someday, but I don’t think it’s true yet. Sure, I can use iTunes to subscribe to thousands of different podcasts, but frankly most of them are crap. And even the better podcasts don’t (to my ear at least) have the production quality of XM. Again, we’ll get there, but we’re not there yet. And podcasts and other digital media will never replace live news broadcasts or live sports programming. So there will be a place for satellite radio. Now, if WiFi or WiMax or whatever became so ubiquitous that I could use an internet-enabled radio to play live streams, then satellite radio would be obsolete.
Overall, I don’t necessarily disagree with Doc, but as an XM subscriber, I tend to think the merger will be a net benefit unless the merged company has to substantially increase rates to cover costs, at which point the industry will be dead and selling off satellites cheap.
