A Little Space Music

What Kind Of music do you like?" asks Jeff Snyder, systems vice president of XM Radio. I hesitate before answering. Snyder is threading a big maroon Cadillac through Washington, D.C., traffic while simultaneously showing off a cute piece of Sony hardware. Plugged into the car's radio, it plays digital music beamed down from a satellite. He hands me a card listing 100 channels--XM's menu--and I reveal my Gen-X status by picking number 44: "classic alternative." XTC's "Dear God" unfolds from the Caddy's speakers. At 18th and K Streets, the signal cuts out for a second. Snyder points at a building on our right. It's blocking the satellite signal, and the repeater--a kind of re-broadcaster--in Georgetown isn't working yet. "But I drove all the way to North Carolina with no problems," he says.

For Satellite Digital Audio Receiver Services (SDARS) the trip has finally begun. After 10 years of hype XM will be available nationally next week. A competing service, Sirius, has delayed its start until early 2002, so for a while it's XM's game. The company has two of the most powerful communications satellites ever built hovering over the equator. Electronics retailers are selling XM radios, and later this month GM will start selling cars with optional XM radios in the dashboard. In the 1990s analysts loved the idea--commercial-free, niche digital radio. In the post-September 11 economic climate they're somewhat dubious. But commercial radio is still vulnerable: it reaches almost everyone but offers few choices in any one place. "The process of making radio is ripe for change," says Chance Patterson, XM's vice president of corporate affairs. "As cable was to broadcast television, we want to be the same thing to radio."

The technology is pretty impressive. XM launched its satellites from a converted oceangoing oil-drilling platform near the equator, where it takes less energy to get to space. Two satellites--named Rock and Roll--now float in geostationary orbit at fixed spots 22,000 miles above the earth. They broadcast in the S-band rather than the Ku-band used by satellite-TV services. That means they can hit a moving car, and there's no "rain fade"--loss of signal due to weather. Tall buildings are still a problem, so the companies use repeaters, refrigerator-size boxes of electronics that strengthen and retransmit the signal. XM thought it would need 1,500 of these nationwide; it turns out it needs fewer than 900 (Washington has a few; New York has dozens). Sirius, on the other hand, has fewer than 100 repeaters nationwide, because its three satellites float in a different orbit, dancing a geosynchronous figure eight over North America and pointing down at more cities.

XM and Sirius have turned to well-known consumer- electronics companies to make the receivers. Sony and Panasonic, among others, are building "head units" for both companies. The radios look normal, though the antennas are squat little assemblies that resemble shark fins or tiny tugboat smokestacks. And XM, at least, sounds pretty good. "Sound quality's more a function of the speakers and the amplifier," Snyder says. "But we get better dynamic range and frequency response than FM." Whatever that means, I did think the music sounded crisper, as though it came from a CD. Being able to see the artist and song title on the radio display was a nice feature--and, one hopes, not an dangerous distraction while driving.

The satellite systems' primary selling point is content, and lots of it. For $9.99 a month, XM offers 71 music channels and 30 talk (it'll be half and half on Sirius, for $12.95). Most of the talk channels come from outside sources like CNN, BBC, and CNET. And 30 of the music channels are commercial-free. Almost all of XM's music originates from a converted industrial building in Washington, where it's assembled from massive music databases, mostly ripped from CDs. The DJs, working in a couple dozen acoustically isolated production booths, know their stuff. Junior Marvin, Bob Marley's old guitarist, hosts a reggae show. In Sirius's offices, a couple of floors in a New York City skyscraper, rap pioneer Grandmaster Flash puts together a show of his own. Both services have channels that play only unsigned bands. They're like funky college radio stations with all the money in the world. Contrast that with commercial radio today: playlists of a couple hundred familiar songs designed by media conglomerates to appeal to specific demographic groups, with up to 20 minutes of commercials per hour. "Radio got consulted out of any creativity it might have had," says Joe Capobianco, senior vice president of content at Sirius. "Now you've got a rehab facility."

It's not clear, though, whether anyone's ready to take the cure. "Satellite radio is an extraordinarily viable medium. It's just not going to blast off as folks like me had thought," says Ryan Jones, a media and entertainment analyst with the Yankee Group. He originally projected 21 million SDARS subscribers by 2005, and revised that down because of the flagging economy. Then Sirius announced its delay and fired its CEO. "Now I am hesitant to put any stake in the ground," Jones says.

This Christmas will be critical for XM. It'll have to improve on the 500 subscribers it claimed after its regional launches in September. Stores like Best Buy and Circuit City will have 100,000 XM receivers on shelves, but a soft economy isn't the best time to sell a subscription service. Both XM and Sirius say they need about 4 million subscribers to be profitable, 2 percent of the car radios on the road. What they really need is early adopters--technophiles, car audio freaks, long-distance commuters--to carry them until cars start reaching dealerships with satellite radios built in. Sirius is partnered with Ford; XM's biggest deal is with GM. That's the real market, when $200 and a monthly fee vanish inside the cost of a $60,000 Jaguar.

But that's no sure thing. SDARS will have to compete with trunk-mounted CD changers, automotive MP3 players and, eventually, In-Band On-Channel--Earth-based digital radio. It wouldn't be national, but it would have similar sound quality and interactivity. "If satellite did some different kinds of programming, they might have an entree, but the moment that happens, the terrestrial broadcasters would steal it," says Jerry Del Colliano, publisher of the industry publication Inside Radio. Satellite radio would definitely be great to have on my next road trip, but Snyder asked me the wrong question in that demonstration Caddy. It's not a matter of what kind of music I like. It's whether I'll pay for it.