XM-Sirius: Land Mines Aplenty

While regulators dithered over whether to approve the deal, competition accelerated and the economy slumped

A lot can happen in 17 months, especially when it comes to the digital music landscape. In the stretch between when Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) first announced their merger (BusinessWeek.com, 2/21/07) and it got final approval from regulators on July 25, the competitive field got crowded for the two satellite radio companies. The state of the economy worsened, forcing folks to think twice about spending on such services as $12.95 a month for radio. Advertising was pinched. And sales of new cars, many that include factory-installed satellite radios, tanked. Meanwhile, products that offer music to listeners, some for free, just kept coming.

Here are some of the new technologies and services rolled out since February 2007 that will surely make it more difficult for a combined XM-Sirius to compete:

Mar. 1, 2007—Verizon Wireless begins offering Qualcomm's (QCOM) MediaFLO radio and TV service to its cell-phone subscribers.

May 31, 2007—CBS (CBS) buys music social network LastFM for $280 million.

June 29, 2007—Apple (AAPL) launches the iPhone, with the capability of streaming Internet radio.

Sept. 5, 2007—Apple launches the iPod Touch, also with the ability to stream radio from the Internet.

Nov. 20, 2007—Music video game Rock Band is released in the U.S. More than 15 million songs have been downloaded since.

Jan. 27, 2008—Ad-supported Qtrax is launched, offering free and legal peer-to-peer downloads from a catalog that the service expects will expand to 25 million songs.

Apr. 3, 2008—News Corp.'s (NWS) MySpace strikes a partnership deal, with three of the four major music companies, that involves playing their labels' music for free in exchange for ad revenue.

May, 2008—AT&T (T) begins offering MediaFLO to its subscribers.

June 10, 2008—AOL (TWX) unveils a new Internet radio player, adding streams from 150 CBS radio stations in an agreement that replaces an earlier deal to showcase stations from XM.

July 3, 2008—Activision (ATVI) announces that its music video game Guitar Hero: On Tour sold 300,000 units in North America in its first week, making it one of the company's top five game launches.

July 11, 2008—Apple introduces the iPhone 3G at a lower price than previous versions and with faster download speeds. Within two weeks, users download 400,000 applications for Internet radio service Pandora to their phones.

Business Exchange related topics:FCCSirius XMSatellite NetworksRadio Broadcasting

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