Band of the Free

Satellite Broadcasting: Radio's Last Stand?

As we celebrate mediocrity, all the boys upstairs want to seeHow much you’ll pay for what you used to get for free

There goes the last DJWho plays what he wants to playAnd says what he wants to say, hey hey hey

And there goes your freedom of choiceThere goes the last human voiceAnd there goes the last DJ

—Tom Petty, “The Last DJ”

In 2001, Tom Petty shook things up a little in the gold-lined halls of Big Radio with the release of The Last DJ. The song is a tribute to the early days of, well, possibly, AM in the 50’s and 60’s, and FM in the 70’s, and a frank condemnation of the current unprecedented control of a small group of station owners over which songs and artists see the light of day.

When Petty went on record with his dissatisfaction at the homogenization of commercial radio, he pointed out the proverbial elephant in the room; but the movement for which the song became the anthem was already well underway.

You say you want a [r]evolution…On November 7, 1994, college station WXYC (http://www.wxyc.org) in Chapel Hill, NC, went live with the world’s first 24-7 web simulcast. Even before the momentous event, music geeks and pirateers had been going live with 16k, low-bandwidth Internet feeds, making their own stations and playing whatever the hell they wanted – commercial free. The quality was pretty bad, though, with 28.8k modems, 1 GB hard drives and 100 MHz processors as the gold standard of the day. Early Internet radio streams constantly bogged down, either from the buffering process overloading the 24 MB of RAM found in most computers, or from servers stretched beyond their limits by too many fans logging on simultaneously.

It was an idea before its time, but time is relative when applied to the speed of the Internet’s evolution. Fast-forward just over a decade and more than 37 million U.S. homes and the overwhelming majority of businesses have broadband access. And considering that America is ranked 11th of the world’s 30 largest economies in high speed connections per capita, there are a whole lot of people out there who can easily get their music without ever leaving the comfort of their terminals.

Goin’ mobile.For the mobile, portable music devices like the iPod have made it possible for anyone to carry around their entire music library in a container the size of a juice box. Amazing. What’s even cooler is that it took about five seconds to figure out that the MP3 file format was available to ANY form of audio recording. With the explosion of blogging (an online diary or journal posted for the world to see), it was only a matter of time (maybe about 1.5 seconds) before podcasting came to be. A podcast is a recorded program that can be downloaded in MP3 format, and then enjoyed at the listener’s convenience. MTV Veejay and former radio legend Adam Curry was a pioneer of the form, developing a download client called ipodder and launching his own series of regular podcasts. It caught on.

Podcasting may never have the financial potential and widespread audience of broadcasting (so say the “experts”), but it has something terrestrial radio broadcasting long ago lost forever: genuine public access. Anybody can podcast, just like anybody can blog. Just turn on your mike, hit “record” on the bundled audio software that came with your computer and Bam! You’re in business. You can say whatever you want; the FCC has no jurisdiction over you or your ideas. Playing tunes is a little more subject to the rules and regulations that have “saved” the music industry (I’m all for paying musicians, but I’m still so very disappointed in Metallica’s behavior); but interviews, talk shows and personal rants are all fair play. Podcasting is like TiVo, only portable.

The times, they are a changin’.Much has been made of the decline of the Big Three “traditional” media: print, network television and radio. Print has been getting the lion’s share of the attention, with constant reports of declining newspaper circulation and apathy on the part of the coveted 18 – 34 year old demographic on a scale so vast it would be funny if it weren’t so sad. But radio, while it hasn’t been hit in the pocketbook as badly, has lost the love of the people. Gone are the days when crowds gathered at remote radio broadcasts to see their favorite personalities and listeners believed in the power of request lines. What happened?

One theory is that all those millions of dollars spent on focus groups and music testing researched the heart and soul right out of the medium. Another is that the effects of what will surely be Bill Clinton’s most enduring legacy – the Telecommunications Act of 1996 – are finally coming to bear. Data from Arbitron, the leading ratings service for the radio industry, shows a slow but steady decline in overall listenership over the last ten years – about the same time that the Act was signed into law. At the time, ownership consolidation was sold to the public in an unabashedly Orwellian fashion: allowing fewer individuals to own more broadcast outlets, the story went, would actually increase competition for listeners and viewers, and ultimately result in a more diversified, balanced information and entertainment offer. Yep, and ignorance is strength. Just ask the FCC.

Within ten years, Clear Channel went from owning 40 radio stations nationwide to over 1,200. Not content to dominate the airwaves, the hungry giant has swallowed up television stations, outdoor advertising companies, syndicated radio networks, entertainment booking companies, satellite and wi-fi enterprises and more, and more… and more. Rumors abound, vehemently denied by the company, that they ban artists, censor playlists and love payola. The company also stands on the argument that the top five radio companies only hold 43f all U.S. broadcast signals. But Clear Channel alone holds major signal shares in 87 of the top 100 markets. It’s an unhappy situation for music lovers (not to mention those who prize a diversity of ideas). And like all unhappy situations in a Capitalist society, innovation has once again risen to fill the void. Enter satellite radio.

Brand new day.Satellite radio was born in 1992, when the FCC allocated a spectrum in the “S” band (2.3 GHz) for nationwide broadcast of satellite-based digital audio radio service. Of the four companies that applied for a license, two of them (Sirius and XM) were granted, at a cost of around $80 million each. In 1997, both received FCC approval to broadcast. Sirius launched its service on July 1, 2002. XM’s official on-air date was September 25, 2001.

A third provider, WorldSpace, began satellite audio services in 1999. WorldSpace currently broadcasts throughout Asia, Europe, the Middle East and Africa.

Sirius and XM, each of which operate on proprietary technology and require the purchase of special receivers, offer over 65 commercial-free music stations apiece, with formats ranging from Sirius’ Elvis Radio (broadcast live from Graceland and run by the King’s best friend and former band mates) to XM’s The Rhyme, spinning old school hip hop in the vein of Grandmaster Flash, Dr. Dre and Kurtis Blow. Both also offer over 50 additional channels of news, talk, sports, entertainment and family programming, heavily peppered with cameos and regular programs by music’s heavyweight stars, from Snoop Dogg to Tom Petty. Sirius is the new home of Howard Stern. XM has Bob Edwards. And both have their pitch honed razor-sharp.

“At XM, we actually let music lovers pick the music they play,” says David Butler, XM’s Director of Corporate Communications, speaking of the air staff. “The people who come to us are in heaven here, this is their Utopia. Many of our programmers are radio veterans who’ve spent years working with tight, restrictive playlists. Here, we let people play and discuss the music they love.”

“We feel that the live radio listening experience is a different experience than listening to a (downloaded) library of songs,” replies Elise Brown, Senior Manager of Public Relations for Sirius, in response to the same question about what makes satellite radio special. “As our CEO Mel Karmazin has stated, our interest is in getting Sirius satellite radio into as many intelligent devices as we can, to make it as easy as possible for the consumer to get our product, so as time goes on, if consumers want their cell phone, PDA or MP3 player to also be a vehicle for satellite radio, we’d like to be there.”

Currently, there are over 5.5 million satellite radio subscribers in the U.S. (4 million for XM, 1.5 million for Sirius) who pony up $12.95 per month for the service. Both companies estimate that number will rise to 20 million by 2010, due in large part to the automotive industry’s heavy partnership. A recent example is Hyundai’s recent announcement that XM will come factory-installed in all of its 2007 models, a figure which could net XM 500,000 subscribers per year if everyone subscribes.

This isn’t a new practice. Car manufacturers have been installing satellite radio receivers in some of their models since 2001. Cleverly, they offer a one to three-month free trial, after which the subscription fee kicks in. And guess what? According to GM reports, 70f those with the radios installed in their cars opt to subscribe. But why?

“I realized I couldn’t live without it,” says Bay View resident Toni Spott. Her new Chevy Malibu came equipped with a multi-band system that included AM, FM, XM – and a 90-day free trial. “It’s so great – no commercials. And the specialized stations, whatever your mood, you can go straight to that station.”

Running to stand still?But analysts remain unsure of satellite’s future. Some compare it to the dot-com boom of the 90’s, using the “b” word (bubble) in reference to XM and Sirius’ stock valuations. In 2004, the two companies lost a combined $1.4 billion against $300 million in revenues. Both have invested untold billions of dollars in a model that, even if it reaches its goal of 20 million subscribers, will still only hold less than 10f total audience share.

Commercial broadcast radio is counting on satellite remaining marginalized, but is hedging its bets with its own massive ad campaign touting the qualities of free radio. Ray Quinn, Entercom’s Market Manager of Milwaukee stations WMYX, Kiss-FM and WEMP, isn’t shaking in his shoes just yet.

Last time I checked, pay radio had about 5 million subscribers,” he says. “And last time I checked with Arbitron, free radio had about 250 million listeners. So it’s about a 99 to 1 percent margin of victory for free radio. Am I supposed to be sitting up at night, biting my fingers to the second knuckle worrying about it? Give me a break.”

WMSE General Manager Tom Crawford agrees, but not with the same enthusiasm. “[Commercial radio] will never go away. I think there’s a group of us who just don’t like it. And there’s a massive group of people who couldn’t care less and find commercial radio acceptable.”

I’m free.But try telling that to satellite’s early adopters. Curt Emmer got into satellite radio because he works in a factory where terrestrial radio signal quality is non-existent, and he’s too busy to mess around with changing CDs all the time. A friend at work had an XM subscription and brought in a portable receiver. Emmer and another friend thought it was a great idea. After checking out both companies’ programming offers, the two went in on a Sirius subscription together. “We took Sirius because of the NFL, so we’ll get to hear all the games at work. They also have the Elvis channel, so it’s all Elvis all the time, plus this really good swing station. And you get to listen all day to the same format of music; there’s no interruptions or changes.”

Spot echoes the sentiment. “It’s not a mix of different music on one station – if you want Frank Sinatra or show tunes, or whatever, it’s all there in one place. I can never find Latin music on regular radio, but there are three with different styles of Latin music right next to each other on XM.”

Neither mind paying for the service. At $12.95 per month (for new subscribers), it’s a fraction of the cost of cable TV, and it’s worth it to be commercial free all the time. “I equate paying for radio to my kids subscribing to Rhapsody (an online music service),” says Spott. “It’s only like nine dollars and some change every month, and it just gets absorbed into the bills.”

Looking into the future, it doesn’t take psychic ability to see that the current format free-for-all can’t last forever. As satellite radio matures and fulfills its eventual contracted requirement to streamline – and then share – its technologies, the financially successful formats will remain, while the others take their place in history. But for now, it’s a new frontier, full of possibility. Kind of like when MTV used to play music.  VS

Jon Anne Willow is Editor and Co-Publisher of Vital Source. She has been a freelance writer and editor for over 20 years, first published in Highlights magazine at the age of ten. So far, this is her only national writing credit.