The XM/Microsoft deal doesn’t make any sense
Here’s what I don’t get about the new deal for Windows Vista to feature XM satellite radio (Internet) channels:
“Web users can sign up for unlimited listening for $7.99 a month, according to XM.”
It’s free for current XM subs.
But, this doesn’t make any sense.
Just as a book is a different medium from a film, online is a different medium from off satellite.
The expectations – assuming they’re set correctly – will likewise be different.
XM – and Sirius – have a chance to completely reshuffle the expectations of users who come to them via the web.
But they’re not.
Just the same old subscription model.
What would I do if I were the great and powerful XM?
I would consider the online channel as a totally different branding challenge. Not an entry route to the satellite service. After all, XM doesn’t have the licensing rights for all their satellite content online so the two are literally different brands. So why not acknowledge that rather than disappoint folks who expect, for example, to get Fox News on both satellite and online.
The contractual quirks are all lost on consumers, I can tell you. They don’t care about your problems. What about their problems?
So here’s what I would do:
Dump the “no commercials” promise online. Sell and run spots. Share the rev with Microsoft. Offer it up for FREE.
XM, do you have any idea how many listeners are downloading radio station streams which INCLUDE commercials? Do you have any idea how many subscription commercial-free (and sometimes cost-free) streams are out there? You have no competitive advantage as is.
Your competitive advantage is in your size: It’s in your ability to do this deal with Microsoft in the first place. Scale is your advantage. Milk it. Don’t erect silly barriers.
Ah, you say, but our current subscribers will put up a fuss.
Not if they’re two different brands. Current subs will understand that the free version is also the commercial-cluttered one. When it comes to the music channels, they’re paying for no commercials, not for XM per se.
I would position the Internet brand differently – for example: “VIBE, by XM.” An all new brand – not a version of the existing one with a constrained selection of channels.
This is Marketing 101, gang.
But first, satellite radio must understand, simply, that they are not in the satellite business. Nor are they in the subscription business.
Theoretically, you might ask, why can’t a major broadcast group do this kind of deal?
Why don’t you ask them?
Unless they’re too busy selling a handful of HD radios.