Why Howard Stern’s next act is Internet radio

Howard Stern‘s contract with Sirius XM is up at the end of the year, and it was good to hear on the show this week that the full retirement option is off the table. That was one of five options Howard said he was considering. Says the Stern site (on a wrapup of Thursday’s show),

Howard said he had a ’5 point plan’ for the show after his Sirius XM contract expires in December: “I know what the future is.” Howard explained: “One of the points is if we decide to stay here…again, if we decide to stay here.” The other 4 points are the other 4 options–one of which (retirement) has already been taken off the table, but until then: “For four months I’m a company man.”

Before I go into my own prediction, I want to give props to Rob Eshman’s Serious Stern blog, in particular to Ten Reasons Howard Stern’s Retirement Will Hurt the World. Here’s the one I’ll focus on:

9. There will be no one else to save satellite radio.

Unless they find the Moshiach and give him a channel, shalom Sirius.  And I say that as someone who like a friggin’ genius bought stock at—I don’t want to say what I bought it at.  I hope Mel Karmazin will figure out a way to transform the company, but under the current model, it really needs a big personality.  No one has an audience as loyal as Howard’s. Done. Period.

Earlier this week, Howard recalled and compared his meetings with XM and Sirius back when both were courting him. These meetings went down while the curtain slowly closed on Howard’s long tenure in terrestrial radio. XM bragged about having more subscribers, having more repeaters on the ground, yada yada, while Sirius asked him what it would take, and then took it. Once on Sirius, Howard rocketed the company past XM in the satellite radio marketplace, and Sirius eventually bought XM. To sum it up, Howard was the star satellite radio needed to establish itself as a medium.

Now Internet radio needs the same thing. It’s time for Howard to make his move. But it doesn’t have to be entirely away from Sirius XM. The two can be bridged. In fact, they need to be — at least for Sirius XM to survive in the long run.

Right now nearly everything you can get on Sirius XM you can get on the Internet, or on what’s left of terrestrial radio, most of which is also on the Net as well. Stations identify with “WFFF and WFFF.com,” the way they used to say “WFFF AM and FM.”  True, “tuning” on the Net is mostly a chore, but the stuff is there, in far more abundance than on Sirius XM’s channels. That company’s stock is under a dollar, and the market’s faith is not positive. But then, Wall Street doesn’t have a clue about Howard. Or it has the wrong clues. For example, finance blogger Relmor Demitrius considers Howard’s importance, and comes to this:

Conclusion. OEM sales exposed the product to many consumers.  They like XM just as much as they like Sirius, but some (less than 5%) are willing to pay for access to Howard, and probably only half of those 5% only for Howard.  Those that have XM haven’t made significant efforts to move over to Sirius, or cancel XM when their free trial ran out, and install a Sirius exclusive radio.  I believe by the facts presented here that Howard is well worth his salary and should be paid accordingly, as well as offering him on smart phone applications and any overseas content offerings.  But is he the end all savior of satellite radio?  Absolutely not.  Satellite radio would be here with or without him.  Company is stronger with him, but would survive just fine without him.  In fact, the cost difference is so minimal, it would be in tune to having a bad year, or a storm hitting your oil well that month.  A small hiccup that would easily be erased with time due to the overwhelming popularity of the product itself and the now vast options of content offered by both companies.  The revenue generated and saving of the 100 million of his contract would simply give reason to spend it elsewhere, and sign other talent to compensate.  Like any company that losses an asset and has to repurchase another one.  Howard’s popularity is no longer so huge that him leaving the platform would harm it in any way medium or long term.  The facts are quite clear on this.  Sirius XM added more than 1 million customers this year alone.  That would offset losing Howard Stern right there.  Their growth would probably cover any cancellations and they wouldn’t miss a beat.  The company that hired Stern 5 years ago is vastly different in 2010.

This is all framed inside satellite radio, which is floundering. What it misses is what will happen when Howard moves to the Net with his own subscription service. Howard will make Internet radio matter, just like he made satellite radio matter. He won’t do it alone, but it will happen a whole lot faster because he’s there.

Right now most Internet radio is free. And that’s fine. In fact, it’s good, and important. But not all radio will be free, just like not all television is free, and not all newspapers and magazines are free. Some broadcasting, like public radio and television, you can pay for voluntarily. But that won’t work for Howard. He’ll want to charge for the goods, and he’ll want to legitimize the business model, just like he did with satellite radio. Count on it.

Stop for a moment and go read The Web is Dead. Long Live the Internet. in Wired. It’s this month’s cover story. The bottom line is this: Internet usage through apps and subscriptions is going up, fast. We’re listening to radio through smartphones, iPads, laptops and other new devices. With the spread of Wi-Fi, 3G, 4G and other wireless connections, we will no longer be tethered to our houses or cars. We will move toward what Bob Frankston calls ambient connectivity. How we get there is less important than the bait that pulls us in that direction. Howard is great bait. That’s why he’ll go there. He fixed satellite radio. Internet radio is next.

What I hope is that he’ll do it independently, and not just through one of the carriers (say, Verizon, AT&T or Comcast). We should be able to download a Howard app for our Android, Symbian, or iOS (Apple iPhone or iPad) device and listen any way we like, anywhere we like. And pay a monthly fee for it.

Now here’s the opportunity for Sirius XM: we should be able to get Howard there too. That’s not just because it’s a good distribution deal, but because the fate of satellite radio is to serve as a repeater for Internet radio. Everything is being absorbed into the Net, including satellite radio. I’m sure Howard knows that. In fact, I’d be amazed if he doesn’t.

So far Sirius XM has done an awful job of embracing the Net. Getting Howard (or any Sirius XM channel) on a browser requires a zillion clicks and an authentication routine that makes going through customs and passport control look simple. The Sirius app for the iPhone is also useless (at least for me and countless others) without Howard (who has never been on it, and it’s never been clear why), and isn’t that great in any case.

But it can be done well. The integration of Internet, satellite — and even terrestrial radio — should be as seamless as possible. If Howard and his new partners get the right techies to help, they can kick ass. In fact, I’m betting that they’ll do exactly that.

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13 comments

  1. Len Feldman’s avatar

    When Stern left terrestrial radio, he didn’t do it because he wanted to pioneer a new medium. He did it because 1) He wanted to get away from the FCC’s control over content, and 2) Sirius offered him an obscene amount of money to leave CBS. I don’t think that his motivations have fundamentally changed. Helping to turn Internet radio into a viable business would be at best a secondary consideration for him. He’ll go wherever he can make the most money and stay beyond the grasp of the FCC.

  2. KD’s avatar

    Doc,

    I hope you were not deceived by the chart at the start of that Wired article you linked to. I didn’t get past that chart, because its vertical scale is percent of estimated internet traffic, ignoring the huge increase in total traffic between 1990 and now. When you redraw the graph using a scale of number of bytes of traffic, you get a radically different picture. I didn’t bother reading the rest of the article because of that. I don’t think I can trust authors who appear to be intentionally misleading their readers. Did I miss some worthwhile reading?

    This point probably does not take much, if anything, away from your main point, since you are talking about internet radio alone, not in competition with other uses of the internet, but I was a little surprised that you pointed us to that article without at least mentioning its misleading graph at its start.

    See:

    http://www.techdirt.com/articles/20100817/11192110659.shtml

    and:

    http://www.boingboing.net/2010/08/17/is-the-web-really-de.html

    for a couple other opinions about that Wired article along this line.

  3. Me’s avatar

    Sirius never surpassed XM in subscribers. Howard at this point is a has been and is not relevant he is one of the reasons the two company’s had to merge since they overpaid him.

  4. Doc Searls’s avatar

    KD, you’re right about that graph, and it got a lot of deserved criticism at the time. I pointed to that article because it goes into the rise of the subscription model, and the deepening divide between stuff that’s free, and stuff we pay for, on the Web.

    Ken, of course Howard has motivations other than pioneering in a new medium. But he’s still a pioneer, and at this point both terrestrial and satellite radio are settled territories. Internet radio is still wide open to the kind of changes he would bring to it.

  5. John’s avatar

    I find many of your posts thought-provoking but too long for the blog form. Less can be more.

  6. Doc Searls’s avatar

    Well, John, I’ve been writing posts of all lengths for eleven years, and with few exceptions the longer posts get the best — and sometimes the most — responses. As for the blog form, it’s what we make of it. And sometimes we make it long.

  7. nerdflu’s avatar

    Doc,
    I think too much focus is on Howard. Opie & Anthony were on XM a couple years before Howard went to Sirius. They are the workhourses of sat radio, and have nearly if not the same ammount of dedicated fans who otherwise wouldn’t have had an XM subscription (myself included).

    I also don’t believe that the way to monitize podcasting (because that’s all “internet radio” is) is not an itunes style pay per show/month, but more like the twit network with small ads.

  8. TooTallSid’s avatar

    I use Kindle, Nook, and iBook software to read books. Kindle and Nook work fine everywhere. I wonder if XM could make an equivalent “listener” app that would work everywhere. I wonder if Amazon, B&N, or Apple, could, too?

  9. Richard the Rock Speakers Guy’s avatar

    I think internet radio can work for someone as big as Howard. The neat thing about it is there is all kinds of other interactive things he could add to his show if it went online.

  10. Christina Hendricks’s avatar

    I’m surprised he hasn’t gone the web radio route before, he certainly has the fanbase.

  11. Haters’s avatar

    Doc,

    I could not agree with you more. I hope that Howard decides to take his show to the internet via podcast or by apps. Even if his show was 3 days a week, I would still pay the same amount I pay with Sirius to see him online maybe even more. I can not believe that Sirius was going to charge me an extra $2.99 to stream Howard. Ridiculous!!

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