BOB GARFIELD: Seven months ago we reported on the launch of XM Satellite Radio which Fortune Magazine has since called the product of the year and the first major advance in radio since FM emerged in the 1960s. XM and now competitor Sirius Satellite Radio each offer 100 channels of digital audio to subscribers willing to buy a new receiver and pay a 10 to 13 dollar a month fee. XM is now heard in every state but Alaska and Hawaii. Sirius is available in 19 states. OTM's Paul Ingles has this report on how these new services are doing with consumers and how commercial and public radio are reacting -- or not reacting. [AMBIENT SOUND CIRCUIT CITY STORE]
JIM KWASNY: Huge, huge, huge category.
MAN: Jim Kwasny leads the way to the Albuquerque Circuit City car stereo department. As audio video sales manager, he makes no effort to control his excitement over the new satellite radio services.
JIM KWASNY: And it's re-inventing our business as we know it, and to say it's spurred growth in our category is, is an understatement.
MAN: Nowadays customers considering a new car stereo will hear their sales rep ask: Do you want satellite radio with that? So far the response is mostly: Satellite what?! And once it's explained, a majority are responding like this fellow.
MAN: Um-- I don't know. I just listen to the radio in -- for free, so -- I guess I'd just stay with the radio. [PUMPED UP MUSIC SNIPPET]
MAN: But on this day at this store in just a couple of hours time, three new subscribers sign up, joining approximately 77,000 nationwide who have become early adopters of the new technology. Hugh Panero is CEO of XM Radio, the first to market with virtually all the subscriptions so far.
HUGH PANERO: Normally what you would expect is that a, a new service like this, you know, coast to coast coverage and digital quality sound and lots of music would appeal to kind of younger males, you know, 18 to 25 which is typical of that group, but what we've been surprised by is that actually when you look at the age it is basically equally distributed among a variety of different age groups and really doesn't even fall off.
MAN: For 2 to 400 dollars for a new receiver and a 10 to 13 dollar monthly fee, these consumer pioneers are getting 100 channels of music, news, talk, sports -- much of it commercial-free with XM Radio -- all of it commercial-free with Sirius Satellite. Some, like 30 year old Robert Saunders, a communications analyst in Bedminster [sp?], New Jersey, didn't need a sales pitch. He knew it was coming; had an XM Radio installed in his car and was waiting when the service signed on in the Northeast, November 14th, 2001. [SNIPPET OF SONG ON SATELLITE RADIO]
ROBERT SAUNDERS: The first day I was really just awe-struck; kind of, kind of in shock [SATELLITE RADIO MUSIC UNDER] at what was there. There was just so much choice, and one format that I'm very fond of is called cross-country which is new country music which doesn't have all the twanginess. [UNTWANGY SONG SNIPPET] Another format I listen to is called Ngoma which is Pan-African music. I, I found that really-- scintillating.
ANNOUNCER: Hear all of these great African hits --
ANNOUNCER: And more!
ANNOUNCER: -- on Ngoma.
ANNOUNCER: An XM Channel. [WOMAN SPEAKING AN AFRICAN LANGUAGE]
ROBERT SAUNDERS: But the station that really got me was, was one called FRED which is kind of a retrospective of, of alternative music.
DEEJAY:...one minute from now we'll do Front Row FRED -- it's a live music fantasy festival inside FRED and yours head. We'll hear music from the Dickies, Beastie Boys, Psychedelic First, Blondie, The Cure [sp?]....
ROBERT SAUNDERS: After about 45 minutes of continuous music, it, it almost brought a tear to my eye, and I, I'm, that's a - that's a really genuine--feeling that I had, because it really was so different than what I had experienced from commercial radio.
MAN: Back at Circuit City customers who were signing up for satellite today all sing the same song -- commercial radio made 'em do it.
LEONARD GONZALEZ: The broadcast radio around town is-- it's not that good. It's-- They overplay a lot of songs.
GWEN: I mean there's a variety. It's not like the local stations -- they play -- you know what hour and what's coming up next - what song's going to play next. You know.
GWEN'S SON: Different variety instead of commercial after commercial after commercial.
RALPH TURTURRO: Broadcasting live from New York -- Home of the Sirius National Broadcast Studios -- this is Ralph Turturro on Classic Rock.
JERRY DEL COLLIANO: My view about satellite radio is that they are the anti-radio.
MAN: Jerry Del Colliano publishes Inside Radio, an industry newsletter, and is author of a book: The Future of Radio.
JERRY DEL COLLIANO: Terrestrial radio's been disconnected from the listener, and satellite radio's come along just at the time when they've been disconnected.
MAN: With most new satellite radio users saying they hardly listen to the local stations any more, you'd think station owners would be taking notice. Del Colliano doesn't see it yet.
JERRY DEL COLLIANO: Satellite is just a pimple on their chin, so to speak, because they think of it in terms of, well, you know, they're not here yet, and you know, they're not that much of a threat.
MAN: Others say that just as traditional TV adapted to the presence of cable, traditional radio will eventually change in response to satellite radio. Joe Clayton is CEO at Sirius Satellite.
JOE CLAYTON: Number one, I think they will embrace digital capability much faster, and two, look at their content and their commercial rotation much closer. When the technology changes, when your competition changes and the consumers taste change, you better change! Or you end up being road kill on the Information Super Highway.
MAN: Not unlike commercial broadcasters, most local public radio managers are saying it's too early to know the impact satellite radio will have on their listeners and contributors, but some of those managers are listening.
MARK VOGELZANG: It's, it's so good it's scary.
MAN: Vermont Public Radio chief Mark Vogelzang bought an XM unit to check out the new competition.
MARK VOGELZANG: As I channel-surfed, I encountered music that has traditionally been in the domain of public radio -- that is, New Age music, blue grass music, folk music, Tejano [sp?] music. Typically on a public radio station we might offer 2 hours, at best, and suddenly on satellite radio it's 24 hours a day of this.
MAN: What listeners won't get from satellite radio though is local content which many public radio stations take pride in. It's what Richard Towne, manager at KUNM in Albuquerque, hopes will keep even satellite subscribers who've found a 24 hour blues channel coming back to his station's 3 hour weekly blues show.
ROBERT TOWNE: Fans of that style of music are going to want to know what concerts are coming; they're going to want to tune in and hear interviews with the artists who are performing and win tickets to the local concert. So I think that the, the local edge still is going to hold audience for us, but it's too early to tell I think.
MAN: Towne may be less concerned about competition from the music channels than he is from the 2 NPR channels featured on the Sirius system. NPR
ANNOUNCER: [...?...] reports a new era [OLDIES MUSIC UNDER] is here -- satellite radio -- and satellite stations you hear from coast to coast. NPR is at the forefront of this new frontier, and you are too.
MAN: Even though NPR's showcase Morning Edition and All Things Considered programs won't be on the satellite service, something comparable will be. Towne expects some NPR listeners who had sent 10 dollars a month to KUNM will start sending that 10 dollars to satellite radio while listening to wall to wall NPR. NPR
ANNOUNCER: Welcome to NPR Now -- in your car, all the time. [MUSIC TAG]
MAN: In the meantime, the debate continues over how many traditional radio listeners will be gobbled up by satellite services and how soon. XM needs 4 million subscribers, Sirius 3 million, before breaking even. Inside Radio's Jerry Del Colliano thinks "Satellite services will survive, will probably be bought out by broadcast companies," he says, "and will ultimately be overrun as a provider of content by wireless internet technologies that we can't even yet imagine." Stay tuned. For On the Media, I'm Paul Ingles.