WINTER, 2000
To find out, we added five custom questions to a national omnibus survey of 1005 adults, conducted January 7-10th. First, we probed how much time they typically listen to radio in the car per week, and which station they listen to most. Then, we said:
I'm going to describe a new service that will become available in the near future. It will be radio, sent directly from satellites to your car for CD-quality audio wherever you go in the U.S. It will offer up to 100 channels including many different kinds of music, information, sports, and children's programming, with few or no commercials. To receive this service, you'll need an additional small antenna on your car, plus an adapter for your car radio. The equipment will also become available on new cars sold beginning next year. The extra equipment will cost around $200. There will also be a monthly subscription fee of around $10 for the service.
Following this description, we asked respondents how likely they would be to subscribe to this new service, and -- if likely or unlikely -- why.
In our analysis, we honed in on 18-64 year olds who have a vehicle that they drive regularly and who listen to their vehicle's radio at least one hour per week. We have 678 such respondents. Here's what we found....
Overall, only 6% say they are "very likely" to subscribe, while more than half say they are "very unlikely"...
| How likely are you to subscribe to this new satellite radio service? | |
| VERY UNLIKELY | 58% |
| SOMEWHAT UNLIKELY | 19% |
| SOMEWHAT LIKELY | 16% |
| VERY LIKELY | 6% |
| Don't know | 1% |
But these numbers shouldn't be taken at face value. As marketing gurus Trout & Ries say: "Don't ask them what they're going to do, because they don't know!"
For one thing, respondents generally overstate the likelihood they'll buy. It's a lot easier to say that you're "likely" than to lay down your money!
For example, one approach takes only half of "very likelies" plus a fourth of "somewhat likelies" as an estimate of potential. (That would give satellite radio a projected penetration of 7%.)
The goal of this research is NOT to predict an exact number, but rather to provide insights into listeners' overall attitudes toward satellite radio and its potential impact on existing stations...
The Bottom Line: Satellite radio will be a source of some erosion for traditional radio overall -- hardly a "Death Star" blast.
But some formats will be affected more than others...
Satellite radio appeals significantly more to men than women. On a percentage basis, twice as many men as women are "very likely" to subscribe.
| How likely are you to subscribe to this new
satellite radio service? |
MEN |
18-24 |
18-24 MEN |
HEAVY THIRD |
| VERY UNLIKELY | 48% | 39% | 26% | 50% |
| SOMEWHAT UNLIKELY | 23% | 18% | 24% | 18% |
| SOMEWHAT LIKELY | 19% | 34% | 36% | 19% |
| VERY LIKELY | 8% | 9% | 13% | 11% |
| Don't know | 2% | 1% | 1% | 2% |
Looking at age groups, 18-24 is a hot cell for satellite radio. Forty-three percent of 18-24's say they're likely to subscribe -- 9% very likely -- with a big drop-off among 25-34's (and smaller declines from there on up).
Though 18-24 women are also more interested in satellite radio than their older counterparts, it is 18-24 men who are satellite radio's hottest potential target. Around half of them say they're likely to subscribe. Given this "hot cell," AOR immediately springs to mind as a format that could be affected by the availability of satellite radio. But AOR isn't alone...
Utilizing area codes and prefixes, along with an up-to-date station database, we determined the formats of stations respondents "spend the most time listening to" in their cars.
Among those who say they're likely to subscribe to satellite radio, 13% name a Country station as their on-the-road P1, 12% name a CHR station and 12% name an AOR. (When we say "AOR," we're including what R&R calls Rock, Active Rock or Alternative, NOT Adult Alternative or Classic Rock.) Next after the top three is Urban, named by 8% of the "likelies."
Of particular concern is satellite's appeal to heavier users of radio. Among the "heavy third" of in-vehicle listeners -- who listen six hours or more per week -- 11% are very likely to subscribe.
Still, I suspect that these data won't cause many in radio to lose sleep! But any potential erosion of radio should be viewed with concern, not complacency.
So, what can radio do to mini- mize the impact of Sirius and XM? As in any battle, the first step is to know the competition's strengths and weaknesses...
One in four (27%) of those likely to subscribe cite satellite radio's greater variety and choices as a reason why. (Lack of commercials is, surprisingly, a distant #2, at 13%.)
Twenty-five percent of those unlikely to subscribe cite cost as a reason why. One respondent spoke for many when he said:
"Why pay for something that you get free?"
Linked with cost, 18% say they don't drive or listen long enough to make subscribing worth it. An equal number indicate that they have "no need" for satellite radio because they're satisfied -- with radio (12%) or CDs/tapes (6%).
But I suspect that cost isn't the greatest near-term challenge for Sirius and XM...
Technology is expanding. But consumers' minds aren't. Given the launch of two incompatible satellite systems delivering up to 200 new channels, how can any of them gain "traction" in listeners' minds?
The real question is: Can Sirius and XM develop channels worth paying for??? Can they develop the emotional, personal connect- ion that we know is essential for a station's success?
Don't give them the chance... build your existing brands! Make sure your
stations are on target, and promote them aggressively. Make an "emotional
connection." That is the single best defense against "the invasion from
space."