Satellite radio’s been riding high. Shares of both Sirius and XM jumped at the end of the year, thanks to positive growth predictions. Both services are signing up subscribers at a brisk clip: XM had over 1.36 million subscribers by the end of 2003; Sirius trailed with 200,000 subscribers. Though estimates vary, most analysts predict big growth over the coming year.
Deals with automotive companies and others surely contributed to the growing subscriber base (time will tell if consumers continue to subscribe). Choice and quality are also big factors. If you’ve ever heard satellite radio, it’s pretty tough to go back to static-y FM or (gulp!) AM. No commercials doesn’t hurt, either. Sirius has always offered commercial-free music, and XM announced starting February 1, it’s going commercial-free on its music channels, too.
Taken on its own, this move toward commercial-free music may not seem like a big deal. After all, we’re only talking 1.5 million total subscribers. However, consider the explosion in online file swapping, digital music players, and online pay music services and continued expansion of Internet radio (commercial-free for the most part on Net-only stations). Those two facts, along with some interesting (if still-fringe) technology, may mean an eventual end to radio as we know it. And, the start of a whole new ballgame for music.
Back in September 2003, digital guru Don Tapscott wrote a piece for the New York Times about a concept he calls “everywhere Internet audio.” The idea’s pretty simple. Using wireless technology (e.g., Wi-Fi) and portable digital music players (such as Apple’s iPod), the music industry could do an end run around pirates by having all music available all the time to any device that can receive it. Instead of buying music on CD or cassette, or downloading it to a PC, we just tap into the airwaves, pick the songs we want (they’d “disappear” come the expiration date), and go.
As Charles Haddad of BusinessWeek put it: “If there were no need to store music, indeed no way it could be stored, then piracy would go the way of Blackbeard, a spooky tale of yesteryear to amuse your grandchildren.”
Could it happen? The idea may not be as crazy at it sounds, especially if instead of plucking files out of the air, we used Wi-Fi-equipped MP3 players to tune in to streaming audio. Base technology is pretty cheap. Wi-Fi adapters can be had for about $29 and MP3 players (especially if they don’t need lots of expensive RAM to store music) can be had for about the same amount. Tie the two together with some programming borrowed from current streaming media players, and you’ve basically got a “radio” that can tune into the world… for about $60.
Lest you doubt the technology will happen, the new Aiero from SoniqCast takes the first step. Users can tap into Wi-Fi to load music into their players from their home computers.
The receiver’s only half the equation. Getting Wi-Fi access is vital to making this scenario work. Even though many public places now offer access, the market is fairly fragmented, with no interoperability between Wi-Fi providers. This would make roaming with a Wi-Fi radio tough. You’d have to maintain several different accounts with different providers to keep coverage, if that coverage extends beyond the lobbies and coffee shops where it’s usually found.
That big problem may have recently been solved by RoamAD, a New Zealand-based company that’s currently demonstrating the first metropolitan cellular Wi-Fi network. Using its technology, subscribers are covered anywhere in a city that’s covered, without line-of-sight and with guaranteed bandwidth of up to 330kps. For streaming music, that’s plenty. Most high-quality online music streams transmit at 128kps.
Apple’s VP of applications marketing, Rob Schoeben, told Reuters recently, “For us, all of a sudden, music is the No. 1 priority of the company.” A reasonable assertion, given the iPod’s stunning success. But as imitators start to move into that market, it seems logical an innovative player such as Apple will look for new ways to deliver the next (in Steve Jobs’ words) “insanely cool” product. A Wi-Fi-enabled player allowing users to listen to high-quality digital music streams could be that product.
As marketers, none of this has any short-term impact. But for the long term, we must keep an eye out. At technology’s current pace, what’s pie-in-the-sky today may be pie-in-your-face tomorrow. If four years ago, someone told you millions of people would walk around listening to music off high-capacity hard drives in their pockets, you’d have thought they were nuts. Today, iPods (and competitors) are commonplace.
Radio isn’t going away in the next few years. But what’s on the horizon may strongly impact how we entertain ourselves… and how we advertise to those who are entertaining themselves.
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