XM announced that it has over 5 million subs and expects to hit 6 million after the holiday season.  Sirius expects to get to 3 million.  Interestingly, Sirius’ market cap at $8.49 Billion, is nearly $1 Billion more than XM’s $7.55 Billion.  I haven’t looked at their balance sheets to figure out the discrepancy (given that the one has double the subs as the other), but I can imagine people calling it the billion dollar Howard Stern premium.

Hats off to the both of them.  5 years ago, I didn’t think both of them would make it, mainly due to the capital requirements (and especially when times were lean).  But time and time again, they were able to sell their story to Wall Street and use them like an ATM as they continued to hemmorhage money in creating a new segment and buying great content to fill the airwaves.  Now that there’s a light at the end of the tunnel, I think it will be easier for them to raise cash if and when they need it. 

I still think satellite radio, as a technology, is a stepping stone — better than AM/FM but eventually to be replaced with some form of IP-based transmission.  But it matters not — these companies have successfully built brands around being the MSO of audio with great sub-brands that act as anchor tenants for their content mall (like MLB for XM).  They’ll be able to swap out the distribution technology when it does change, just like Comcast will eventually deploy IP-TV.  Besides having built brands with all of that Wall St. $, they also have deep relationships with automakers – the key distribution platform for radio, as well as the CE makers.

Finally, I can see them morph into much more than a pay radio service.  Already they’re offering rudimentary traffic & weather information services, which is really getting the traditional radio broadcasters nervous (as well they should be).   By virtue of their brands and distribution, I can see them becoming "Music Service Providers" (MSPs).  Already,  XM has hooked up with Napster in a co-marketing deal.  It’s not a stretch to imagine them one day buying Napster whose $170 Million market cap is roughly the same as Napster’s cash holdings, and equal to about a quarter of losses at XM.  This would help counter a threat from Apple who is muscling into the car dashboard with iPod docks.  While Apple doesn’t have a subscription service nor premium radio, they could do either or both without much trouble.   

People have talked about a merger of XM & Sirius but this would be tough to pull off politically since the spectrum they occupy is a congressionally-created duopoly.  By the time they become profitable, the two companies will have burned
through high single-digit billions of dollars but I’m not betting on
them going away. 

[Disclaimer: I hold no positions on either stock nor am I making any recommendation on them.]

I wish I had a dollar for every time "MySpace came up in a conversation at DIgital Hollywood.  Recently, I’ve met or seen a lot of companies that are trying to emulate MySpace, or VCs looking for the next MySpace.  For instance, I heard Napster will be rolling out a Web-based experience, which I’m sure will include a community and social networking aspect.  This makes a lot of sense — they already have features where you can view others’ playlists but all of these are in their closed system accessible only through their downloaded app.

MySpace did a brilliant job of catering to indie bands and using each band’s base of users to bring new ones in and to inter-connect with one another.  Like MTV used music videos to lure users into their lifestyle, so MySpace has used music and related content to extend their network.  Most impressively or tragically, depending on your viewpoint, they, like MTV, did it without paying the labels!

Update: Ironically, a contact wrote to me yesterday, who hadn’t read this post,  saying that he was working on something that would "put MySpace out of business"…actually turns out to be a very interesting idea!

PassAlong Networks recently announced a an application that links music on your hard drive with newarby concerts.   As Digital Music News described it, "Artists with upcoming shows in the area are listed at the top of the window. Click on a link and details appear below with concert dates. Buttons that link with Mapquest, the venue schedule and Ticketmaster are at the bottom of the window."

This is a neat idea and I’m looking forward to donwloading it and giving it a try.  I’ve always thought concert listings were a pain point — too many places to try to look them up in any meaningful way.  Getting this data upstream at my music library would be useful.  I particularly like the notion of having recommended shows fed to me based on matching my preferences to that of others,  so I can learn about new acts I may want to check out. 

I haven’t tried it out yet though…hopefully their execution is as good as their idea. 

Congrats to Nimrod Lev and the team at kSolo for winning first prize in this year’s Popkomm competition (SonicBids and Gracenote placed 2nd & 3rd respectively).  I wasn’t surprised.  I first saw their demo in May and was blown away by it — it was like nothing I’d seen in the 6 years I’ve been in the biz — so much so that I have recently begun working with them.

kSolo operates an online karaoke service.  Users can sign up and select from thousands of songs that they’ve licensed from the appropriate rights holders.  Once you’ve selected a song, there is a Web-based (Flash) interface that is as if you’re in front of a karaoke machine — backing music/vocals, lyrics and of course the bouncing ball!  You then sing into your computer and they record everything server-side, which is then available to send to your friends or post as a link.  I’ll spare you my rendition of "California Dreamin”…

Like their Robbie Williams deal, EMI’s deal with Korn involves their taking a piece of many revenue streams, not just the sale and licensing of sound recordings.  That’s how it should be and indeed is the future of music as Dave Kusek & Gerd Leonhard have argued.  I agree.