Commentary

FutureTool: Satellite Radio

Satellite radio will soon be creating a big bang across the U.S. Two companies, XM Radio and Sirius Radio, got together a year ago and agreed upon a technology that brings selected radio stations into a car or portable unit anywhere in the country. XM Radio is the first company to offer its service nationwide. Subscribers have access to 100 radio stations broadcast from Washington D.C, New York, and Nashville. From these facilities, signals are transferred to XM’s two satellites, which stay fixed in orbit on the East and West coasts, down to your radio. In the event you’re around tall buildings or canyons, XM also has repeaters or ground antennas in place to boost the satellites’ signal. The subscription costs about $10 monthly, and at around $300, the receiver is not much more expensive than any other high-end audio product.

Sirius Radio offers a similar service using the same technology. It has three satellites in orbit and a spare on the ground, just in case. With a special receiver you can subscribe to either of the services, but Sirius will cost you $12.99 a month. Both companies have signed deals with the big automakers (Porsche, GM, and Ford to name a few) to install satellite-capable receivers in their cars. In fact, if you’re in the market for a 2002 Cadillac Seville or DeVille, it’ll be part of your option package. The lineup offered by the two companies—music, sports, news, and even entertainment channels like E!—is also comparable.

Why the difference in cost? Advertising. Sirius’ service is “commercial-free,” uninterrupted radio, while XM plans to supplement its cash flow in a variety of ways. XM will limit commercials on each of its channels, providing its advertiser with prime 30-, 60-, 90-, or 120-second spots. These spots will be available on a per-station basis or across a ten-station band to allow for targeting of almost any demographic. Commercial-free stations and hourly XM feature interviews and broadcasts will also be available for exclusive sponsorships. For those interested in metrics, XM will begin audience measurement in the spring of 2002. Visit www.XMRadio.com for more information.

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