Karmazin takes a swipe at internet radio in call


Mel KarmazinDuring his Q3 earnings call, the outgoing SiriusXM CEO Mel Karmazin slammed the business model behind personalized Internet radio services such as Pandora, but didn’t name any of them directly. Pandora has yet to turn a profit, but SiriusXM is scoring record earnings with its subscription-only business model.

These internet services are a “race to the bottom in terms of business model…those companies that can grow users and provide good customer experience usually have the worst business models.”

The fix, he said, requires many more commercials, and that means “harming the customer’s experience.”

But that isn’t stopping him from getting in the personalized internet service/music discovery game (but there will not be a free option). Karmazin says that will be launched soon, as soon as the end this year. However, it’s not because he thinks its good for business. He’s adding it to the existing SiriusXM online channels because customers want the service: “not because we think it’s a good business.”

RBR-TVBR observation: Karmazin has made the subscription model work great for SiriusXM. However, we think he’s wrong a bit on free internet radio like Pandora being a bad business model. The pool of folks wanting to pay for music is only so deep. There is a huge market out there that subscription will never reach. Advertisers want to pay to be in free content, just like with other free media. The internet/mobile is the new platform for delivery, so eventually there will be profits–just like with SiriusXM (which had losses for years until penetration levels were high enough).


  1. Pandora never plays what I want to hear (besides the fact that it always wants to play live versions of everything), has annoying interruptions and is no substitute for Sirius/XM. Unfortunately without Mel Karmazin’s leadership, Sirius/XM will likely begin cutting corners (loss of programming integrity) in order in an attempt to beef up the bottom line and will ultimately lose its classiness as a distinct top of the line music service.

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