Will Americans pay to turn on the radio?

Until now, radio has been free. But with new satellite technology and customizable playlists, will customers be willing to pay to play?

Like many Americans, blues musician Delbert McClinton has turned off his radio.

He says he can't listen anymore because "in order to hear one good song, you've gotta wade through an hour of stuff that has no substance to it whatsoever."

"People are tired of hearing what they're hearing," he adds.

Quality-starved radio fans like McClinton now have a new option.

Two new satellite-transmitted services – Sirius Satellite Radio and XM Satellite Radio – are each offering 100 channels of music, news, and entertainment programming with CD-quality sound and minimal or no commercial interruption. And, unlike terrestrial (land-transmitted) radio signals, satellite gives car-obsessed Americans the ability to cruise from Maine to California without ever having to change the station.

XM reaches listeners via two satellites, cutely named Rock and Roll, positioned over the East and West coasts. Sirius, named after the Dog Star, has three, orbiting over the country. Both use terrestrial "repeaters" for areas where buildings or similar obstacles could prevent clear reception. Each has exclusive deals with carmakers and radio manufacturers; Sirius radios also will become standard equipment in Formula powerboats.

Both offer country, rock, classical, Latin, jazz, and almost every other musical format, each of which has been split into several subcategories. The concept is much like that of cable or satellite TV: infinitely more variety and much better transmission – for a price.

Another monthly fee to worry about

Are Americans hungry enough for variety to pay a few hundred dollars for new equipment, plus a monthly fee of either $9.99 or $12.95, for a service they've always gotten free of charge?

Not according to local radio fan Kelly Rasmussen. "I'd return to my cassette tapes or old radio broadcasts before I'd pay a satellite company any money for what should be and always has been free just for putting up with commercials," she comments on the Internet site ZDNet.

Adding to the risk is this summer's economic doldrums. With a rocky stock market undermining already shaky consumer confidence, Americans may be hesitant to add another bill to the monthly pile.

But a just-released survey conducted by the Future of Music Coalition (FMC), a nonprofit advocacy group in Washington, D.C., that works on issues affecting artists, may bolster satellite radio's bottom line. More than half of the 500 people interviewed said they want more new music, with less repetition than they get on today's conglomerate-owned commercial stations.

Millions of them have turned to Internet broadcasters, but there's one problem: You can't listen to Internet radio in your car.

Independent Internet radio broadcasters might soon go the way of the eight-track tape anyway, because the Librarian of Congress has just mandated they must pay song royalty fees that in most cases will far outstrip their income.

With the demise of Napster and other musical file-sharing services, listeners craving exposure to new music might find satellite radio a worthy option.

"XM can and has opened up entirely new areas of music to explore," says subscriber Don Herring. "You can listen to music that you would not even begin to know how to sample [on the Internet]. I'm getting a very thorough reeducation in my favorite genre on the all-blues channel."

The two companies are counting on listeners' being attracted to their programming and strong air personalities, many of them industry legends who are thrilled at having another chance to create radio as they did once upon a time.

"In a world where [CDs] cost $18, music fans really rely on and look forward to people who can essentially serve as editors for them," says FMC lobbyist Michael Bracy. "They want to have a DJ controlling what gets played and they want access to more alternative programming models than they're offered in commercial radio.

"Commercial radio is antiartist, anticompetitive, and antimusic-fan," he says, noting the survey also showed that listeners are opposed to any more of the consolidation that began after Congress relaxed station ownership limits in 1996.

History of tuning out listeners

XM senior vice president and chief programmer Lee Abrams, who is credited with inventing album rock, classic rock, urban/dance, and many other radio formats, likens the evolution of satellite radio to broadcasting's big metamorphosis from AM to FM dominance.

In the late 1960s, he explains, AM was ignoring the explosion of new music being made. Stations sometimes played big hits by Jimi Hendrix or Santana late at night, but their outdated-sounding jocks didn't "get" the music – which sounded terrible anyway, because it was meant to be heard in stereo. "FM came in and embraced these artists," Mr. Abrams recalls. "Gave them their own format. Secondly, back then AMs were running 18 minutes of commercials an hour and choking people.

"It's the same scenario now, except FM is the culprit," he says. "FMs are not part of the new technological retooling that's happening with the Internet, cellphone, digital, Palm Pilot era. Just like FM took advantage of all of AM's vulnerabilities, [satellite radio] is taking advantage of all of FM's vulnerabilities."

Joe Capobianco, senior vice president of music content and programming operations at Sirius, says, "We exist to deliver programming directly to individuals, regardless of where they are. That is a fundamental concept that flips radio, as we know it, on its head."

Addressing the fears of land-based radio corporations and the handful of locally operated stations that remain, Mr. Capobianco says, "We will not replace [local] radio; we will coexist with radio – but we are now another choice."

A choice with lots of choices. For instance: Both services don't just play classic rock; they have channels devoted to each decade. Instead of one country channel, each has six, including classic, alternative, and bluegrass. Both have blues, reggae, gospel, show tunes, comedy, Radio Disney, the Weather Channel, CNN, CNBC, Bloomberg, and other news services.

They also share A&E, the History Channel, E!, and other variety channels. Sirius charges a few bucks more, but its big boast is having all 60 music channels completely commercial-free. XM has 71 music channels, but only 34 are commercial-free. Four are feeds of stations owned by Clear Channel Communications, which owns more than 1,200 radio stations and is lambasted by critics as the biggest of the behemoths that ruined FM. (Spokeswoman Pam Taylor says: "Clear Channel is obsessed with giving consumers what they want to hear.... We're more responsive to listener input than any other company.")

It has invested in the service, according to Abrams, on the "if you can't beat 'em, join 'em" premise.

Though both are available only in the contiguous US, Sirius claims its signal can be heard 200 miles into Canada and offshore, and in Alaska during certain hours.

Both have state-of-the-art broadcast facilities, XM in Washington, D.C., and Sirius in New York, where they produce original programming, record live interviews and performances, and store vast libraries of digitized music. In those offices, staffers like XM Americana programmer Jessie Scott say they finally have their dream job. Visitors like the Smithereens' Pat DiNizio clamor to work there. (DiNizio is now programming XM's "Unsigned" new artist channel.)

The war for subscribers heats up

Both companies are competing mightily to win over truckers and traveling salespeople, but they also expect to serve commuters and customers in areas of poor radio reception or selection. XM's portable Sony plug-and-play unit, for both home and car use, is gaining popularity.

Len Klein of Cape Cod, Mass., says he loves the choices and uninterrupted, excellent-sounding broadcasts. "I have not listened to a CD in my vehicle since the XM installation [four months ago]," he reports.

And, despite the fears of those in terrestrial radio who worry that satellite service will cut into their listenership, Mr. Klein says he doesn't see it replacing local stations. "When I want the local news and weather, I still dial in my favorite local station," he says.

Programmer Meg Griffin says satellite radio competition might even spur other stations to improve their programming. "We're about bringing something to the plate, not taking something away," she says. "Every new technology is a complement to what's already there. The light bulb didn't put candlemakers out of business."

Says Ms. Scott, "What XM is about is real radio.... It's not just an audio stream. It's about the magic of a disc jockey being in the moment and being able to respond to whatever happens. It really liberates radio."

According to Radio & Record, an industry trade magazine, a PriceWaterhouseCoopers study says satellite radio will have 5 million subscribers paying $630 million in subscriptions by 2006.

"Our goal here, and we take it very seriously ... is really to ... revolutionize radio," says Abrams. "There's no more purely American experience than driving down the freeway, top down, with a great station blaring. We just wanna bring that experience back to America."

I'm sold on satellite radio (almost)

After testing both XM and Sirius satellite radio, all I can say is, "Where do I sign up?"

My city has an exceptional Adult Album Alternative (AAA) public radio station, but there are those programming dead zones. And the ability to drive for hours without vainly trying to tune in a decent station or fiddling with CDs at more than 60 m.p.h. is pure joy. Plus, satellite units display artist names and song titles. Gotta love it.

There are drawbacks – each company's hardware is proprietary; you can't yet buy one receiver and get both services or switch between them. They also expect you to spring for receivers and subscriptions for each listening area, which is silly; there should be a deal for multiple subscriptions.

XM's portable plug-and-play unit can be transferred between vehicles and your home, so only one subscription is needed; but it's got limitations: only five channel presets, and a screen too small to show long titles. (Sirius's portable units are still in development).

But the Sirius unit that I tried had only six presets, and a serious danger: It scrolls the titles across the screen, so it's tempting to try to read as you drive – which also happens when you hunt for stations. (XM's unit has a handy remote control.) You can buy XM and Sirius units at Best Buy and Circuit City, and activate them online at www.xmradio.com or www.sirius.com.

As for channels, XM has dynamite stations like XM Café (modern, soft alternative); X Country (alternative country), XMU (new rock); and XM Comedy (uncensored and funny enough to keep me alert on a five-hour drive – a major feat).

But XM's progressive station IDs fall flat; they're a distraction, and the four commercial-laden Clear Channel feeds smack of the deal they are: Clear Channel is a major investor.

Sirius, on the other hand, has E-1-7 (eclectic rock), an AAA station that blends alt-country, alternative, and other formats. It also features more relaxed DJs and fewer commercials. But its comedy channel is really lame, and I heard a bleep. They have a hard-core rap channel, but censored comedy? Well, they say they're still working on content, and the bit I heard may have come pre-bleeped.

I'll probably wait till unit prices come down and allow interchangeability, but I'll definitely be a satellite radio customer. And no, it won't replace my local station, but in towns with lousy radio, it certainly could.

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