Thursday, March 08, 2007

Tiered Pricing

March 8, 2007

There are several ways to look at a tiered pricing platform for satellite radio. Some are advantageous, and others are not.

One advantage of a tiered system could well relate to the ongoing arbitration with the RIAA.

As things currently stand, the RIAA receives a set percentage of subscription revenue. The percentage remains the same even if the subscriber never tunes in a music stream. This is one of the crucial points illustrated by Sirius.

Sirius argues that the RIAA is benefiting from subscribers that came to Sirius for stern, and spend most of their listening time tuned into his channels. By what right does the RIAA have claim to any dollars attributable to Stern? news channels? Sports channels? ETC.

It is possible that Sirius and XM (as a merged company, or as separate entities) could create a tiered system by which music is all lumped into one category with a set price per month. All other tiers would fall outside of the realm of the RIAA, and realistically speaking, they would have no right or claim to those other dollars. If we assume that the music only portion of a current subscription was $8.99 per month, then the RIAA would get a percentage of those dollars only, and no claim to the other $4.00 per month.

As things stand now, Sirius and XM have a decent shot at doing well in the RIAA negotiations because they can always fall back to a tiered format to limit the dollars expended. On the other hand, the RIAA is fighting this battle in the legislature as well as the current negotiations. Should the RIAA prevail with law makers, the current negotiations become virtually moot.

No one would reasonably argue that the artists should not be compensated for their work. There is a strong argument that the artists are currently being compensated for the work of Stern, Oprah, Jay Thomas, etc. Is that fair? Certainly there is a reasonable middle ground, but there will be a lot of maneuvering in the process of getting there.

In thinking of my listening over the last two days, I can honestly say did not listen to any music. I caught Stern, CNBC, Fox News, and a bit of Sirius Stars. I would like to see reader feedback relating to the listening habits of SSG readers.

Seeing that Sirius and XM are in the middle of negotiations with the RIAA, and also a merger, it is likely, and understandable, that they want to hold their cards close to the vest.

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3/08/2007 12:01:00 PM

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  • My listening is mostly Howard with Vikings games some comedy and the Jam station . No self respecting Dead Head would not be able to stay away from a Jerry Garcia jam or two a day !!!

    By Blogger eduardo, at March 08, 2007 2:31 PM  

  • I am an XM fanatic, I listen to The Loft, XM Cafe, Ethel, Bluesville and the Starbucks Channel. I like some Jazz and a Classical stuff on ocassion. No talk radio, no news, no O&A and no Howard (after we merge, no offense Howard) for me. ONLY MUSIC! Go Satellite Radio!

    By Anonymous Anonymous, at March 08, 2007 10:30 PM  

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