SiriusXM CEO Jim Meyer announced Thursday the price for the regular, self-pay service will increase 50 cents to $14.99 a month and will be implemented in the first quarter. Its previous price increase came in January 2012, when the monthly rate rose to $14.49 from $12.95. Meyer said customers will be notified of the price hike next week.
 
Many of today's most popular music services -- YouTube, Vevo, Pandora, Spotify -- are free. On-demand digital music subscription services are not in a position to raise prices. Yet SiriusXM shows consumers are willing to pay for music, and other entertainment, if presented with a good deal.
 
So what sets SiriusXM apart from its radio and digital music competitors? I see four factors.
 
Distribution and conversion: About 70% of new cars come with a SiriusXM trial and roughly 45% of trial users convert into paying customers at the end of the trial. Some analysts believe 45% is a low conversion rate, but compare it to other music services. I estimate Pandora converts less than 5% of its monthly active listeners into subscribers, but keep in mind conversion from free to paid is not the company's top priority. Conversion is a top priority for Spotify, which converts about 25% of its active listeners (six million subscribers out of 24 million active users).
 
Programming: Distribution doesn't matter if consumers aren't provided a valuable service they can't get anywhere else. Part of SiriusXM's value stems from its programming -- both music and non-music programs like sports and talk. The service offers curated radio stations, artist-specific stations (Bruce Springsteen, Elvis, Pearl Jam and others), live concerts, Howard Stern (exclusively) and a range of sports, news and talk shows.
 
Bundling: SiriusXM creates more value than its music competitors by bundling music and other types of programming. A music subscription service or Internet radio service that focuses solely on music will attract a smaller audience than a more varied service with a similar price. Internet radio service Slacker has taken steps in this direction by offering news items from ABC, ESPN and the American Public Media program Marketplace in addition to its personalized music service. 
 
Barriers to entry: Because the startup costs of a satellite radio company are incredibly high, SiriusXM is unlikely to face another satellite competitor anytime soon. And because it's a satellite-based company, the SiriusXM signal can be heard across North America. The rise of the connected automobile will present SiriusXM with more competition. Its acquisition of Agero, a provider of connected vehicle services, for $530 million suggests SiriusXM is intent on protecting its presence in the automobile.
 
SiriusXM has been on a tear lately. In the third quarter, SiriusXM posted record revenue of $962 million, up 11% from the third quarter of 2012. Adjusted earnings before income taxes, depreciation and amortization (EBITDA) for the third quarter of 2013 was a record $296 million, up 21% from the third quarter of 2012.
 
The financial metrics are driven by continued growth in subscribers. The company ended the quarter with 26.5 million subscribers, up 9% from the third quarter of 2012. It added 513,000 net subscribers, including 373,000 self-pay net additions. Both figures are post-merger records for the third quarter.
 
To put SiriusXM's subscriber base into context, consider ESPN has about 98 million subscribers in the United States and HBO has about 29 million subscribers, according to an SNL Kagan estimate. Netflix has about 30 million subscribers in North America and another nine million internationally. Yes, today's consumer will pay for music and other entertainment. They'll even withstand price increases, as long as the service provides enough value and has a unique product.


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