Forget Stern, Satellite Radio's Pull Depends On Remaining Commercial-Free

By David Kaplan, Tuesday, Feb 8, 2005 7:00 AM EST
MUCH LIKE CABLE AND SATELLITE television, the major promise of satellite radio is its ability to deliver commercial-free content, a survey by J.P. Morgan found.
Though demand for satellite radio is still strong, the survey indicates that XM Satellite Radio could achieve at least a 35 percent penetration level at its $10 price point and that Sirius could reach at least 19 percent penetration at its $13 subscription price.
"While this is below the respective 43 percent and 26 percent penetration levels suggested by our previous survey, it still implies a healthy level of demand for satellite radio," said Stephen Wang, an analyst for J.P. Morgan.
"What it comes down to is, the absence of commercials on satellite radio still reigns as the No. 1 driver of demand. Unique content, on the other hand, appears to be the least important factor, which implies that the loss of Howard Stern and other programming should not have too negative an impact."
In terms of the amount of time subscribers spend listening to satellite radio, respondents said they spent two-thirds of their time with satellite radio, a trend that suggests a significant erosion of regular radio's audience.
"This means that terrestrial radio listening will likely be cannibalized as penetration rises," Wang said. "If satellite radio listening is confined to the car, we estimate cannibalization to be 3.5 percent in 2010. The risk increases significantly if satellite radio listening expands to at home and/or at work."
In looking at the radio industry as a whole, J.P. Morgan is currently forecasting a 3 to 4 percent annual long-term revenue growth projection for the radio industry assuming flat inventory, with 2 percent annual audience declines, and 5.5 percent CPM growth.
Traditional radio has only one advantage when it comes to slowing the growth of satellite radio - whether or not consumers will become more price sensitive to subscription and start-up fees, Wang said.
"Though 57 percent said they would be willing to pay some fee for satellite radio service, non-subscribers in our new survey are showing greater price sensitivity in their demand for satellite radio," he said. "Still, it's obvious that early adopters tend to be less price-sensitive. But if satellite radio plays its cards right, there's no reason why it shouldn't be able to increase demand among the rest of the population."

Podcasting gives Weblogs a voice

Podcasting gives Weblogs a voice
But can Internet audio challenge traditional radio?


By Matthew Fordahl
AP Technology Writer
Updated: 1:45 p.m. ET Feb. 6, 2005
SAN JOSE, Calif. — - After getting a taste of the radio business in college, software designer Craig Patchett never lost his interest in broadcasting. But without a job in radio, it seemed likely to remain one of those unfulfilled passions — until something called “podcasting” came along.Now, Patchett’s creating shows and sending them out to the masses every day — not over the airwaves to radios but over the Internet, from his personal computer in Carlsbad, Calif.His listeners download his shows to their iPods and other digital music players.Patchett, 43, is among a growing number of people getting into podcasting, which is quickly becoming another of the Internet’s equalizing technologies.Less than a year old, podcasting enables anyone with a PC to become a broadcaster. It has the potential to do to the radio business what Web logs have done to print journalism. By bringing the cost of broadcasting to nearly nothing, it’s enabling more voices and messages to be heard than ever before.“It was just one of those things where you read about a technology and it clicks in your head: This is perfect and something I want to get involved with,” said Patchett, whose podcasts focus on Christian and family programming.For listeners, podcasting offers a diverse menu of programs, which can be enjoyed anywhere, anytime. Unlike traditional radio, shows can be easily paused, rewound or fast-forwarded. The listener doesn’t need to be near a PC, unlike most forms of Internet radio.The number of regular podcasts is well over 800 and growing daily. Many focus on gadgets, technology and podcasting itself. Others highlight new bands and music or discuss the latest developments in politics, movies and sports. There are podcasts for beer lovers and wine aficionados, even a few for astronomy buffs and for activities performed in the buff.Productions range from stream-of-consciousness rants punctuated by “uhs” to highly professional shows complete with sound effects and music. Unlike radio, there’s no time limit, deadlines or government oversight of what’s said.“There are going to be podcast stars who are just entertaining to listen to,” said Adam Curry, a former MTV personality and a driving force behind podcasting. “There will be Howard Sterns who can use the seven dirty words on their shows.”Before podcasting arrived, Curry was frustrated by the state of broadcasting on the Internet, which is often done by streaming feeds. Unlike with traditional radio, streaming costs grow with the audience, and it’s difficult for listeners to do save the show or do anything else with it afterward.By comparison, regular downloads of audio files can be more evenly distributed over time and let listeners move programs to portable devices. Before podcasting, however, there was no simple mechanism to do that automatically.Curry saw potential in a technology called Really Simple Syndication, or RSS, which automatically feeds text from Web logs and other sites to subscribers so they can read summaries from many sites at once.After meeting with Curry in 1999, RSS co-inventor Dave Winer updated the protocol so that attachments, such as MP3 audio files, could be sent along with text.But there was no program that could automatically transfer the files to a music player — until last summer when Curry taught himself the AppleScript programming language and created a small program called iPodder.It caught the attention of programmers.“Within in a week, not only had people improved the script dramatically, but they started creating their own versions in Python, Perl and Java” programming languages, Curry said. “A whole new category of software had been created.”Curry also started up a podcast, “Daily Source Code,” to give the programmers something to listen to. But it didn’t take long for other shows to appear.“Basically, it was a radio show for a very small community, which just grew astronomically,” he said. “Before I knew it, people were sending me links and clips from their own podcasts. We didn’t even have the name ‘podcast’ — we were calling them shows, audioblog posts all kinds of different names.”It was in a Sept. 15 online post that Dannie Gregoire of Louisville, Ky., coined “podcast.”When entered into a Google search, the word now returns 1.6 million results. Curry says his own podcast now has 50,000 listeners, and Gregoire has created a portal that organizes podcasts by content. A number of Web sites do the same, including Curry’s ipodder.org and Patchett’s godcast.org.But is there money to be made? Maybe, podcasters say.Gregoire, who runs one of the go-to Web sites for anyone interested in the phenomenon, says he’s looking at a number of business models, including offering a service to host shows or simple tools to put them online.“Even though it’s relatively easy, there are still stumbling blocks,” he said.Real radio stations are also taking note. Public radio’s WGBH in Boston has started podcasting its weekly “American Stories” segment, which saw its downloads jump from 30 downloads in the first week to 57,000 in December.“Those are the kinds of trend lines that get your attention,” said Bob Lyons, the station’s director of radio and new media initiatives. “They certainly got ours.”The corporate world is also jumping in. Thomson Petersons, best known for its college guides and test-prep books, was expected to announce plans Tuesday to begin podcasting 10-minute audio files offering students general advice on college admissions, financial aid and standardized tests.Podcasting isn’t likely to threaten traditional broadcasting any time soon, as the number of digital music players is only in the tens of millions, compared with hundreds of millions of radios. But as the player market grows — and more devices such as cell phones become capable of play audio files — it could pull away advertising dollars, especially those that target younger generations.Public radio is showing the most interest, both in distributing traditional programs as podcasts and looking for new voices.“It’s easier for us to jump into this because our profit model is still very similar to the profit model of podcasting, which is put something out there and then figure out how to ask money for it,” said Brendan Greeley, site editor of the Public Radio Exchange, a distributor of programming.Some podcasters still see podcasting as just a fun hobby.Mark VandeWettering, a Pixar Animation Studios technical director, podcasts from his El Sobrante, Calif., home on a range of subjects, including fatherhood, baseball and telescope building.“It would be great if I made a fortune doing it, but I don’t see how that could possibly happen,” he said. “I’m not really trying for it, either. I’m hoping to meet some interesting people and establish some good communications with people on weird topics.”