Satellite radio soon to orbit your car

New service likely to cause the biggest change for listeners since FM

Early next year, you may be browsing for a device that looks like a car radio but has an extra button - one for the satellite band.

That button and $9.95 a month will beam a different kind of radio to your dashboard.

If successful, it will be the kind that doesn't fade out when you're driving from Pittsburgh to Denver. The kind with few or no commercials and dozens of talk, news, sports, and music channels, with hosts like Sting and Quincy Jones.

It has musicians buzzing and broadcasters creating special satellite divisions as the industry contemplates the future of digital radio -and if people are willing to pay for it.

For the price of a movie, companies will deliver to your home or car dozens of CD-quality channels in genres often missing from radio dials -Blues to Broadway, children's to classical, Latin to country.

Though there is not a single subscriber yet, some industry analysts are saying satellite radio could affect listeners and competition the way FM radio did three decades ago. "Satellite radio may do to FM what FM did to AM" -force it to change, says consultant Skip Pizzi, a contributing editor at BE Radio magazine.

Radio's recent consolidations and uniform sound, along with surveys saying listeners are unhappy with the lack of choice and number of commercials, have observers saying there is an opening for something different.

"The problem with stations nowadays is they haven't rewritten the creative playbook in 30 years, and they're running 20 minutes of commercials [an hour]," says Lee Abrams, a radio veteran and chief programming officer for XM Satellite Radio in Washington, D.C.

It could be several years before wireless Internet radio hits cars, where it may or may not be used for sustained listening. That leaves the field open for the only approved satellite companies: Sirius Satellite Radio in New York City, which plans to launch in January, and XM, which expects to flip the switch before mid-2001.

A niche that covers the nation

"A lot of people feel that with the direction traditional radio is going ... there's going to be an opportunity for satellite radio to appeal to some people in the niche formats that are not being served," says Paul Maloney, associate producer of RAIN, the Radio and Internet Newsletter.

By May, radios that receive Sirius channels should be available in shops like Best Buy and Circuit City, and are planned for a few new cars or as options from dealers.

Even so, it may take time for pay radio to catch on. Veronis, Suhler & Associates, a New York investment bank specializing in media, indicated in its July forecast that satellite radio and another newcomer, low-power radio, are "not expected to have a meaningful impact on the radio industry for three to four years."

"We still think there's a market for [satellite radio]," says Leo Kivijarv, the bank's director of publications. "But it will all be told in how much the consumer will want to be buying it and how quickly."

Though predictions are difficult before the product is available, research by the companies and some analysts estimate subscribers could be in the 25 million to 50 million range by 2005.

Meanwhile, broadcasters are preparing for the new format. National Public Radio has created a new division for satellite programming, NPR2, which will have two channels on Sirius. "We view our programming on satellite radio as an incubator," says Margaret Low Smith, vice president of NPR2. "It's a lot less scary to start programs in this space. Part of the goal is to create new voices for the future of public radio."

Artists are also intrigued. At Sirius headquarters in Manhattan, performers like Kenny Loggins stop by unexpectedly to see what the future looks like. And Alice Cooper and Emmylou Harris come to record music and interviews and stay to talk about their favorite teams on the Major League Baseball channel. Sting has signed on to do a daily show. XM is sealing deals with Quincy Jones, Ted Nugent (who will host a talk show), Tom Petty, and Faith Hill.

Both companies will offer 100 channels each -roughly a 50-50 split between music and talk. They are signing up broadcasters like C-SPAN, the BBC, Black Entertainment Television/Radio One, the Sci-fi channel, and Nascar to provide content they don't produce themselves. Sirius expects to have no ads on its music channels, and an average of 4 minutes on some talk channels; XM anticipates 8 to 12 minutes on its talk channels, and from none to several minutes on music channels.

Car and truck manufacturers like General Motors (XM) and Ford (Sirius) will offer FM/AM/Satellite radios in some vehicles in the next two years. Initially, they will either receive XM or Sirius, but not both. A radio that can pick up either signal is expected to follow. Meanwhile, Sirius is concentrating on cars, while XM plans to target auto, in-home, and boombox units.

But for all this cutting-edge energy,the question remains: Will people pay for it?

Almost ready for prime time

In July of 1998, Arbitron asked people a few questions about satellite radio as part of its first survey on Internet listening. It found that 56 percent of the respondents were very or somewhat interested in the concept, while 41 percent had no interest at all. The test next year will be to see if interest translates into action.

"This isn't radio as usual," says Joe Capobianco, senior vice president of content at Sirius. "We agree that people will not pay for what they can get now. We have to give them something more than, better than, other than they can get now."

Another factor is how national service will fare. People will always look to local radio for things like weather, traffic, and news -and the human touch, some say.

"With satellite radio, it's going to be just like the Internet -it's impersonal," says Glo Rivera, owner of talk radio station KGLW in San Luis Obispo, Calif. "If you don't have anybody on the local level, you lose," she adds.

XM's Mr. Abrams says it's a myth that satellite radio will be generic. "We are fully in your face, personality radio. Each channel isn't a channel, but it's a living, breathing radio station that'll be individually branded. It won't be 'Channel 8: Rock,' but our rock will be called 'Liquid Metal'.... We don't want listeners, we want fans."

Sirius plans to do the same - with hosts like Grandmaster Flash and Randy Travis. "This is a personal product, this is a one-to-one situation, and that's how we approach it and that's as local as you can get," says Mr. Capobianco.

For NPR, even with the unknowns, the choice to be involved was easy. "Do I think we should be there? Absolutely," says NPR2's Smith. "Do I know what's going to happen and what it means to radio? No. But it's certainly an opportunity we wouldn't want to miss."

(c) Copyright 2000. The Christian Science Publishing Society

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