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The new audio frontier

Orbitcast is one of the best places to get tips on what satellite radio is up to and how it affects the rest of the audio entertainment and information universe.

Today I see two posts of note:

NPD Group’s September sales data have showed a consecutive decline in the satellite radio retail channel, when compaired to the same period last year. In August unit sales were down 3% year-over-year, but in September they dropped 12% industry-wide YoY [year over year]. The Quick Glance: Sirius September 2006 Retail Sales: Down 9% YoY XM September 2006 Retail Sales: Down 15% YoY

Orbitcast correctly notes that it’s tough to compare sales in the year that brought us Howard Stern to the year after, but it sure does suggest a “settling” in demand for subscriptions.

Then again, if you saw our recent NAB presentation, this settling might make more sense to you since the challenges of satellite radio are similar to those of HD radio (albeit in a milder form).

My belief – which I have often alluded to – is that the true model for success for satellite radio is not dependent on selling radios or subs. But a tease is all you’ll get from me for now.

Apple Computer filed for a patent application for a method of saving media from various sources for later purchase. It’s an ingenious method of grabbing snippets of audio, identifying the song and allowing the user the option to purchase that song.

The implication is that the iPod will “talk to” AM/FM radio and/or Satellite to fix what Orbitcast notes is a glaring weakness of the iPod: It’s inability to “discover” music (something that is very much a strength of radio, as noted in our recent NAB presentation).

If I understand this right, this is a capability that some satellite radio units have today. But satellite radio is one thing, the ubiquitous iPod is another.

I have argued that iPods would never have AM/FM capability (because of Apple’s passion for elegance and simplicity), but the need to “discover” music is real and does crack the window for AM/FM, HD, Satellite, and WiFi – insofar as they relate to the iPod. Today, radio is the way most listeners of all ages discover new music. But will that always be true? Especially if your iPod can sniff out the hits from multiple sources simultaneously?

And keep in mind that if iPods can sniff out songs from FM radio their ability to smoothly download those songs and add them to each listener’s playlist means more reasons to use your iPod and fewer reasons to listen to the radio. The appetite for discovery is no match for the hunger for the familiar.

Look for the satellite folks to engage in a major push to get a leg up here (in fact, the Apple documents mention XM by name). It is inevitable that radio will have to share the “audio discovery highway” with alternative media not under our control. And satellite has a national platform and a well established set of brand channels, both of which radio lack – on the other hand, every radio station has a relationship with its listeners and that’s something satellite lacks for all but those who subscribe.

Still, in the long run, it will not be about where I can get the new Diddy tune (since that answer will be “everywhere”) but where I can get what’s unique and exclusive.

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