There is chatter today on the Satwaves Forums regarding perceived benefits of Sirius XM (SIRI) offering free trials and free Internet streams with the debut of their soon to be announced iPhone and iPod applications.
AM and FM radio is free, and yet 15 to 20 million people have fled that platform in favor of Sirius XM’s subscription based service. As the recent releases of Sirius XM’s Memorial Day weekend lineups have demonstrated, the service is simply superior to traditional radio.
In my opinion, providing free trials or similar free Internet streams will provide the company no benefit whatsoever, be they long term or short term. In fact, any current subscriber who happens to also own an Apple (AAPL) iPhone or iPod will gain the incentive of cancelling their paid subscriptions to Satellite Radio in lieu of a free, albeit limited Internet offering available on this new medium. Consumers know how to save money, and even 3 month suspensions of service will hurt Sirius XM’s bottom line at a time when profitability is job one.
The application itself should be free, yet require a subscription to be useful.
The simple fact that Sirius XM’s exclusive content such as Howard Stern, Oprah, Opie & Anthony, Bubba, Martha Stewart and Chris “Mad Dog” Russo may be heard by way of these Apple devices, will drive new subscribers who do not need to purchase new equipment.
Content offerings such as these could be available on over 30 million devices, and will make Sirius XM more attractive to users already in OEM promotional periods, by adding value at the point of sale to owners of Ford (F), GM and Chrysler vehicles as well as the import lines.
Offering free music streaming requires royalty payments to be made whether a fee is charged or not. Where would the money come from for free Internet music offerings? Eventually, existing consumer prices would have to be raised to pay for any free trials offered, and a further loss of paying subscribers would result.
Free is not a business model. You get what you pay for.
Position: Long SIRI
I think Sirius should go with the porn model–$2.95 for the first month, and if you forget to cancel, they get you at full price on a monthly basis. And once they suck you in, you can’t help but blow your wad…metaphorically speaking.
The app should be free with the monthly price being 3 dollars. Thats what i think should happen. I really feel that if you even went as high as 5 you would get alot of new subs trying it out.
Am/Fm is free and yes sirius Xm does have 15 to 20 million listeners but
lets not forget they also lost about a half million subs q1 (some being parking lot subs i know).
If they can offer this option at this price it would be a HUGE way to offset the loss of subs in the upcoming quarters.
How many out there would pay 3 a month with iphone app. Lets see, There are 35 iphones/touches. My guess is you land 100 to 500k subs from it.
Brandon
App should be free…no question! However, I do think that either a free trial of 2 weeks would be ok or as Brad stated above…a low initial monthly fee…then a monthly fee thats representative of the content available. If app is as good as Demian claims(I hope he is right), keep subscription rates the same or you will cannalablize the existing sub base. Initial Iphone/touch take rates maybe 1-2%…300-600K new subs…but over time…with OEM channels combined with new Iphone/touch users…could see upto 5-10 million new subs per year.IMHO
As I have mentioned previously, my opinion is that the stockholders could (and should) also be doing their part in promoting the company. After all, we do have a vested interest.
Not only do I feel strongly that we all should be talking about SiriXM to friends, family, and folks that we meet, but we should also be posting notes on various social networks – such as Facebook, Twitter, & MySpace – about how great it is to not be listening to drivel and commercials such as is on the antiquated terrestrial radio!
In addition to promoting the product, I challenge every Siri stockholder (and subscriber, for that matter) to gift a friend or family member a sat radio & subscription!
Frankly, if it’s all about revenue, then the stockholders would certainly get their money back & then some!
Brandon, nice take on free not being free…. The incentive that is usually given is “Here sample our product for free to get a taste and once you do, you’ll buy the service”… I do not believe that those are the folks that we want… something free until it’s not and then their gone…. A marketing plan that I believe would work, is “Buy the app for the iphone, we give you 14 days free sub service, Sign up for a month to month after that, We will credit the app price and give you your first month free, minimum 6 months. Sign up for a yearly and we’ll give you 15 months… and the app credit… My reason is that you only want paying customers… not “free loaders”….
“In my opinion, providing free trials or similar free Internet streams will provide the company no benefit whatsoever, be they long term or short term.”
How can you ignore a basic tactic that is utilized by companies all over the world and has been proven to work year in and year out for subscriptions based companies in particular? You just dismiss that fact with “your opinion” that it will offer “no benefit whatsoever?” What could you possibly be basing this on? It defies all business logic.