Satellite radio users down on ads
By Eric Morath The, Detroit News
First published: Monday, February 5, 2007
Consumers can run, but they can't hide from the almighty ad: Satellite radio listeners are the latest to be irked by the omnipresence of marketing pitches.
Last year, advertisements began popping up on four XM Radio music channels, even though thousands of customers signed up under the promise of commercial-free listening.
Some analysts predict current satellite advertising is just the start of the trend.
Frustrated XM subscribers join the ranks of cable TV viewers and Internet surfers, who once enjoyed less commercialized playgrounds but now have spam-filled in boxes and movies chopped up into 15-minute segments.
"I bought XM radio because I wanted something that wasn't clogged with commercials," said Alfred Lupercio of Chesterfield Township, Mich. "But now there seems to be more and more, and I figure it's not worth the money."
Lupercio plans to cancel his XM subscription, which costs about $142 a year, and buy an iPod for his car.
Ironically, XM is a somewhat unwilling participant in the latest frontier of commercial infringement.
Like its primary competitor, Sirius, XM has always had commercials on its talk stations and, before 2004, had some commercial music stations. But to match Sirius, it switched to commercial-free music.
Then, one-time XM investor and terrestrial radio station operator Clear Channel sued, and won the right to play commercials on the four XM stations it controls.
XM, in response, added four new commercial-free channels in similar formats to the Clear Channel stations.
"We have the most commercial-free music on satellite radio," said Chance Patterson, XM vice president of corporate affairs. "We have more commercial-free channels now than we had total channels when we started."
But XM can no longer market itself as all commercial-free music, as Sirius often does.
The change boils the blood of subscribers like Lupercio, who swear there are more commercials on XM talk channels as well.
XM officials say talk commercials have not changed, and often follow the format of the content provider, such as CNN.
Satellite radio listeners still have plenty of commercial-free options, but that's likely to change in the long run, said telecom analyst Jeff Kagan.
"As they grow and gain subscribers, I can't imagine them giving up the millions in revenue they could take in from advertisers," he said. XM Radio has 7.6 million subscribers and Sirius has more than 6 million.
"The key is doing it in a way that's not offensive to listeners. Marketing yourself as commercial-free and then suddenly adding commercials is offensive."
Both advertisers and media providers need to balance the "collateral damage" of angering some customers with the benefits of reaching new audiences or increasing revenues, said Dave Regan, an instructor in Michigan State University's Advertising, Public Relation and Retail department.
Sirius officials, however, say they have no intention to add commercials to its music stations and XM says it has no plans to expand its number of ad-supported music channels.
Most satellite radio users won't bail out simply because a few more channels have commercials on them, said industry analyst April Horace with Janco Partners Inc.
She said most users pick their services based on programming, such as Howard Stern's Sirius stations or Major League Baseball on XM.
Market Data 
Markets 
AI
