Will satellite radio jump-start the stalling auto industry? Car makers are banking on the star power of A-list celebs like 50 Cent, Eminem and Pamela Anderson to give your ride an overhaul
Digital Journal — Want to see the Next Big Thing? Look in your driveway. No, not the oil stain under your car. It’s the humble car radio, which is about to get its biggest makeover since Canadian Reginald Fessenden used a continuous-wave transmitter in 1906 to deliver the first long-range voice and music broadcast.
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| Car makers are banking on the star power of A-list celebs like Pamela Anderson and 50 cent to give your ride an overhaul. — Photo courtesy of Sirius Satellite Radio |
The revolution is satellite radio. Its benefits would appeal to any AM/FM junkie: digitally encoded CD-quality sound, scores of mostly commercial-free channels and the ability to listen to any station no matter where you are in North America.
Satellite radio also offers the ability to rewrite the current marketing model for land-based stations. Instead of competing for advertising dollars within the reach of their transmitters, satellite radio operators will get their revenue from subscriptions. Researchers say listeners are willing to pay about $13 per month for radio free of commercials and full of choice. It would only take a million subscribers like these for a satellite radio provider to break even.
From the consumer’s point of view, it’s no big deal. A number of 2006 car models will come with pre-installed FM, AM and SR receivers, and an extra $140 a year will offer buyers a feast of listening.
But from other points of view, it’s big business. Really big.
So it’s no surprise most of the major automakers have invested heavily in satellite radio, primarily in two big names: XM Satellite Radio (5 million subscribers) and Sirius (2 million). General Motors, Honda, DaimlerChrysler, BMW, Toyota and Ford are counting on satellite radio to revive a slumping industry that already faced a 5.2 per cent sales slide in the first five months of the year.
It’s hardly a desperation move. Everyone from programmers to auto manufacturers to investors all expect SR to attract 25 to 30 million listeners by 2008 or 2009. And that’s considered a conservative estimate.
Part of the appeal to satellite radio operators is that programming is cheap. With no ad salesmen, newsrooms or weather reporters to hire, station directors can program most of the music by computer. The only legwork is dipping into a half-century of recorded music and dividing it for niche markets.
For auto manufacturers, there is a more serious side to supplying their products with digital signals. Once a digital stream is introduced, other car technologies will surely follow, such as Internet, video, anti-theft and vehicle-tracking devices — all features car makers will use to lure buyers.
This article is part of Digital Journal‘s Summer 2005 issue. To read the rest of this story, pick up your copy in bookstores across Canada or the United States!
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