Market Overview

Sirius XM Hasn't Learned from the Mistakes of Others

As a Sirius XM Radio (NASDAQ: SIRI) subscriber, I am pleased to announce that I thoroughly enjoy my radio service and love having the numerous options the company has to offer uninterrupted during my travels anywhere in the country.

However, I am NOT happy to announce the receipt of a letter in my inbox from CEO Mel Karmazin, announcing an increase in the cost of my subscription.

Has no one learned from the continuous faux pas creations of Reed Hastings at Netflix (NASDAQ: NFLX), James Balsillie and Mike Lazardis at Research In Motion (NASDAQ: RIMM), and Howard Stringer at Sony (NYSE: SNE)?

The letter reads as this, addressed to me, the "valued subscriber", saying "I would like to thank you for being a subscriber and for your continued support. As the Chief Executive Officer of SiriusXM, I spend much of my time focused on satellites, programming and employees, which are all very important, but nothing is more important to me than our subscribers. I understand that the primary reason you subscribe to SiriusXM is the unparalleled choice we offer, and since launching over a decade ago, we have continuously expanded the variety and quality of the programming we provide."

Okay, so we're off to a bad start already. I knew immediately that this letter was not going to contain any information that would please me, because companies never contact their constituents unless something is wrong.

I actually feel insulted by it, as Reed Hastings sent me an email-letter on September 19 starting off with a bit more humility, writing, "I messed up. I owe you an explanation. It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology."

Well, Sirius XM is (once again), about to mess up. Mel tries to soften the blow of his wallet-robbing plans by saying, "I hope you understand that to continue bringing this unbeatable listening experience to our subscribers, there will be a modest rate increase of $1.00 to $1.54 per month — about 5 cents a day or less — on most SiriusXM audio packages. This increase will take effect on your next renewal date that occurs on or after January 1, 2012." I guess this means that there is a consensus among audio/video service providing CEOs that says, "hey, everyone else is screwing their customers with higher rates, let's get on THAT bandwagon!"

Satellite radio is one of my luxuries in life and these continued increases in rates become increasingly frustrating. You'll note that Mel notes that the rate increase is "modest" and is for an "unbeatable listening experience", when really similar content can be obtained through Podcasts or Pandora Media (NYSE: P), if you have the apps.

Sirius XM currently charges invoice fees ($2.00) if you don't have automatic billing (which I do NOT recommend, as the company will give you a promotional deal for a sectioned plan and then charge you the FULL price without notification of plan expiration OR of billing, regardless of whether you request to not be charged at the end of the plan or not) and recommended in this letter that the best value is the 'All Access' package, which is obviously more expensive than what you have now.

The last paragraph of Mel's letter says this, "As we continue to add exciting new content and find more ways for you to enjoy our programming, we will work hard to control costs and create efficiencies to ensure SiriusXM continues to be the best value for your entertainment dollar." Obviously the company isn't working THAT hard at controlling costs, otherwise there wouldn't be this 54% increase in rates.

Netflix lost 800,000 members because of it's rate increase and Qwikster ordeal according to USA Today, DigitalTrends reported on the PlayStation Vita's 80% sales drop after the device showed technical issues to purchasers, and Mike Lazardis and Jim Balsillie were named two of the worst CEOs of 2011 by the New York Times. Jon Corzine of MF Global is another one, but a separate issue outside of this particular topic.

To wrap up this rant, I just wanted to poke at Reed Hastings a bit more, because although I am still a Netflix subscriber as well, I downgraded to just the "Watch Instantly" plan. The third-to-last paragraph in his aforementioned "apology" letter read this: "For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you."

Sorry Reed that you never got the opportunity for the Qwikster logo to grow on you. I'm also sorry that nobody cares.

Posted-In: digitaltrends James Balsillie Jon Corzine Mel KarmazinNews Offerings Management General Best of Benzinga

 

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