Will XMSR Customer Complaints Kill its Stock?
Over a year ago, I noted the decaying customer service quality in a few companies: In particular, Dell got named as a significant offender. (More recently, I complained about obnoxious Dell preinstalls).
I collected a ton of emails from readers about consumer complaints (mostly from January 2005).
I should have paid closer attention. Although I did not have a position in Dell, I missed the opportunity to short it.
Since that deluge of criticism in January 2005 the stock has underperformed dramatically, down 35% from over $41 to under $27. The stock was recently downgraded to a SELL at Citigroup -- see that red bar down towards the far right on big volume? That's the downgrade. The sell rating was due in part to customer service complaints.
The XM chart shows that I am already late to this kvetch-fest -- it looks like XM may already have had their Dell moment -- the stock is down even more -- a 50% haircut from $40 to $20. Ouch!
There's only so much any company can cut their "basic business concept" before they start causing a problem with their consumers. That obviously happened at Dell, via the degradation of their "vaunted customer service" and it appears to be going on at XMSR.
Quite bluntly, if your business model is based on a specific concept, you screw around with that at your own risk. For Dell, it was cheap and direct sales coupled with great customer service; Saving a few pennies by outsourcing/cutting back on support, and/or switching to cheaper components (as some readers have complained about with Dell) seems to be corporate suicide.
For XM, it may be that cutting the variety of their offerings will be their Waterloo. Their raison d'etre seems to be a broad and deep variety of eclectic channels. But as Chrissy Hyndes sang so long ago: But you mess with the goods doll, honey, you gotta pay. *
Here's the post that started the calvalcade of complaints:
"I keep getting e-mail from disgruntled XM subscribers. That their favorite channel, #51, Music Lab, has bitten the dust. I'll print one below.
This is totally fucked up. The promise of satellite radio was to go deep, to provide something for EVERYONE! But the new regime at XM, the Infinity assholes, are turning XM into the bullshit terrestrial radio that they came from. And this makes me CRAZY!
First came channel 49, Big Tracks. With the INANE tagline "Our Classic Rock". This is just the kind of b.s. unlistenable terrestrial classic rock stations use. And the station's got no DEPTH! Just the same fucking tracks over and over again. With no surprises.
But now it's worse. Music Lab was booted and what did we get? MORE HITS CHANNELS!!!
We've got XM 17, U.S. Country, Country Superstars of the 80s and 90s.
How about XM 26, Flight 26, Modern Hits 90s and Now.
Or XM 30. Hitlist. TODAY'S Hit Music.
Or 68, The Heat, RHYTHMIC HITS!
Or 91, Viva, Latin Pop Hits.
Oh, they brought back Liquid Metal, which had been banished before, but what we've now got is endless b.s. hits stations, replicating what is ALREADY AVAILABLE ON XM, their only saving grace being no commercials.
This is a big deal. This is like the death of free-format FM radio, but WORSE! The golden era is OVER!
And what about the people who subscribed to XM ONLY for Music Lab? People like Craig Anderton, the electronic music and instrument GURU! Who signed up for two years, EXPECTING he'd be able to listen to his kind of music. Which he could get nowhere else, which is why he subscribed to XM.
The lunatics have taken over the asylum. DO NOT SUBSCRIBE TO XM! They don't have Howard, and the people now running the place have their heads up their ass."
Reader responses follow . . .
UPDATE: May 23, 2006 8:21am
Nice mention of this post in Wes Phillips's Stereophile Column this week
All of XM's Trials
Stereophile, May 21, 2006
UPDATE: May 24, 2006 5:21pm
Geesh! The stock got shellacked today on a downgrade on subscriber expectations:
XM, the nation's largest satellite radio provider, lowered its subscriber forecast, citing unexpected weakness in demand for its satellite radio service as well as potential legal pitfalls from a recording industry lawsuit.
It now expects to reach 8.5 million subscribers by the end of 2006, lower than its previous guidance for nine million customers by year's end. The company had 6.5 million subscribers at the end of the first quarter.
Shares tumbled on the news, losing 11%, or $1.76, to $13.75 at 4 p.m. on the Nasdaq Stock Market.
In case you were going to write anything on the new XM channels, I thought I'd mention that these new channels came at the expense of one of the coolest radio stations around (in my opinion).
Channel #51 got lost in the shuffle! I know Progressive Rock is probably not your favorite genre, but I know you can probably appreciate a lot of the music. A lot of people are ticked off about this, but the response I got from the top brass at XM was that "the audience wasn't there."
Below is the letter that I sent, which may explain why that response ticked me off even more.
Dear XM Radio,
Where did XM MUSIC LAB Channel #51 go? Monday morning it just disappeared? And in its place are a bunch of generic Pop, Latin, and Country channels! That's not what I want!! I'll trade you all of those stations for Music Lab any day! You obviously don't understand what you've got here! Music Lab was the ONLY outlet for Progressive Rock anywhere, or "Music for Musicians" (as your sweepers used to call it).
Sure, there are some Internet channels doing this format, but you can't pick those up in your car, and even with broadband, the quality does not even come close to satellite. And all Sirius has is their "Jam Channel" which caters to Dead-Heads, and Phish-Heads. After being a huge advocate from day one, my XM radio has just become junk hardware that I will probably throw in a drawer at home and is now nothing more than an extra expense that I no longer need.
Oh well. I guess it was just too good to be true. A station that would play a full side of Pink Floyd's "Dark Side Of The Moon" into Genesis, "Supper's Ready," into some Spock's Beard, followed by Yes, "Close To The Edge," Jeff Beck, Primus, Gabriel, Crimson, and Zappa! Real music by the best musicians in the world that we couldn't get anywhere else!
I realize that Progressive Rock is probably a smaller "niche" audience, but isn't that why we BUY XM in the first place? Niche formats with the best music don't always justify ratings in every terrestrial market. But when XM came along, you were supposed to change all that?!?! Now we were allowed to listen to the music WE wanted! Not what programmers wanted us to hear! And on top of it, you raised your rates?!?!?!?
Well, fortunately, I still have my iPod.
Tune into CH 52 - the Canadian channel
As you know, I'm super stoked on the new Chill channel - 84. I've been asking for it for years and am in heaven, I listen to it pretty much constantly.
But I've noticed something that I don't like: Lucy has changed. Used to be that Lucy was the flashback hit songs, while Fred was sort of the flashback deep tracks and Ethel was new alternative. Now Lucy is some sort of salad of Fred and Ethel. I'll hear Arcade Fire and then one of Everclear's singles from '95. I like going to a channel and knowing what to expect. I liked that Lucy played those singles, even if they were songs that were so overplayed on KROQ that I came to hate them -- there's a nostalgia to those songs, now. But to turn on Lucy and hear The Killers???? It's just weird.
P.S. Just got out of the car - Lucy has a new theme: It says it's from Taxi (and you hear the theme from the tv show) to Taxicab Confessions (and you hear a door slam). Lucy has no personality.
i will say the entire hard rock and metal community (which is huge) was pretty pissed when they pulled the "liquid metal" channel. i really see no reason why they did that. it was the only reason i even got XM in the first place.
Its called the long tail. Old media doesn't get it. Its why Amazon Apple Google are here.
Same problem with the new Canadian channel, 52 - they keep playing the same 20 songs over and over - very irritating.... you can't listen to the station for more than an hour... that's not why I subscribe to XM! Great tunes on 52, but there is much more than the limited playlist they have on rotation... I never thought of XM in terms of "rotation" before... such an outdated, terrestrial radio term!
Ultimately, what we know to be radio is about share of dashboard, and today the dashboard belongs to terrestrial radio with lots of interim technologies fighting for access: iPods, Motorola's iRadio, HD Radio, and the flavor du jour, Satellite. Ultimately these will all prove just that: Interim, place holders for Broadband Everywhere, arriving over the next decade. Detroit and anyone else with a car factory wants connectivity to and from the car, and when it is solid at 64k and above, ubiquitous and priced at a reasonable flat fee, that is when you'll see the change technology has only hinted at bringing the music business.
Your car's terabyte database of music, mapping and media will be constantly replenished wirelessly, a TIVO of buffered push, with companies fighting to access to your car's map, dashboard, speakers and passenger displays. While you're at lunch, the software will scan Internet radio for high-bandwidth songs and shows to buffer for your jukebox, and make note of restaurant, fuel and other deals to help guide your route home.
Bob, I don't subscribe to XM, but I do pay for Sirius. Until the 25th of this month.
I love Howard, but...is that all there is? I'm not going to pay $12.95 to listen to repetetive music on the classic vinyl, rewind, soul and jazz channels. And I'm certainly not going to pay for the interruptions. My observations after 5 months as a subscriber: The Sirius music channels are inhabited by mediocre to bad jocks (they couldn't get part-time weekend jobs at major market radio stations) who suffer from diarrhea of the mouth. I cringe when I hear them try to be witty, funny or topical. They go on and on about what's on the other channels (those would be commercials, which they weren't supposed to have; Sirius might quibble with me and call them "promo liners"). I've heard the same 2-3 jocks voice tracking multiple channels at the same time! And when a jock comes out of a Doors record and starts reading the group's history from Wikipedia, word for word, I find myself yelling "Shut the fuck up and just play music!!!" (No wonder I got dirty looks in traffic today; I didn't
realize my car window was down when I yelled). I'm going to sell my Sirius receiver on e-Bay and buy an iPod. I'll program my own music, thank you. Greed will probably do to sat radio what it's already done to its terrestrial counterpart. The late radio greats, guys like McLendon, Storz and Tom Donahue (the father of free form FM radio), must be spinning in their graves.
I sample a lot of channels on XM in my store and I have to say that most of them that I play for my customer's: Frank's Place, Jazz, and classical seem on a long loop, as do Classic Rock, Alternative Rock, Blues, & Vox.
Sometimes on Deep Tracks you hear the same song progression as well. I used to think I had found a place, but today I'm not sure.
Not to mention the commercials on the talk channels of course.
Maybe it's back to publicradiofan.com in the store.
Fortunately, we have Sirius, which I listen to constantly and love. The Classic Alternative, and Alt. Nation are great, along with the classic rewind and so on. I love Sirius. Plus the DJ's are pretty funny sometimes!
wow, sad. i've noticed subtle changes on the XM channels that I listen to, a lot more in-house spots cross-promoting other channels.
I still like Xm, but agree that 51 should have been left alone
but it's still much better than terrestrial.
Unless XM (and Sirius) has the ability to use the channels at their expense to give listeners the big deep world of music, they will just become a replica of the terrestrial radio dial, albeit without the college stations which are usually train wrecks, anyway....
the money needed and the money desired is what usually causes the problems...u can never get great free-form radio once the source becomes "mainstream"-- watch for Sirius to either deteriorate or become smart & endorse good quality control (although I doubt it)
They should have gotten Sirius, Jam On Rules!
I bought XM, found ch51, and never changed it, not once. They cancelled ch51, I cancelled my subscription. It was fun while it lasted, all 5 weeks of it.
Rocky Del Balzo:
Lee Abrams was on a panel at last year's MUSEXPO. I asked Lee, since he was (by his own admission) responsible for fucking up rock radio on FM, why should we have any more confidence that he will get it right this time? His answer was that he won't let it happen. OOOOps.
You had been a massive supporter of XM in the early, growing years---as was I. I militarized many friends to sign up and wooed them w/ the revelries of music utopianism, deep album cuts and new discovery that, well, in retrospect, I should have known better as i've been around in this business well long enough. I've been with them for well over two years--well, could be three actually, never forgetting the first time that first signal came thru and the first song I heard was one of my all time faves, Be Bop Deluxe. I said to myself, "Glory be to God on high, this is going to be amazing!".
It was. For about six months.
I've noticed, as you have, that the growing restrictive spirit pervading my favorite stations and creeping, gulp, blandness has created serious issues with their core, intial listeners. And that they care little of folks like us, as well. We helped them get past that initial burn-phase, get out of the atmophere and now we're just parts of the corporate fuselage falling to the sea. I chalked some of it up to growing pains pondering to myself it was better than anything the alternative of terrestial radio which I have not listened to on any type of regular basis since the last great days of late 70's WBCN in Boston.
But the last six months have been dreadfully shocking. What on EARTH is going on there?! Has whatever corporate soul that helped launch it been sucked out forever in quarterly earnings reporting, researchers w/ no love of music being brought in to make 'recommendations' (when I read this, my Lord, it was like an recovered drug friend falling off the wagon of sobriety, you knew the ending was going to be ugly...and sad...) and the cool DJ visionaries silenced after endless boardroom meetings? Quite Evidently.
We can only judge by the result of the most important litmus test there is.
And it's shockingly unadventurous and bland by their own initial standards, across the board. All my fave stations on XM have had demonstrable fall-outs in the 'hip', cool and adventuresome area. All. Even the classical stations have falling to the 'classics' trap and avoided playing modern, vital, living composers who forging exciting new paths in a dying genre but still, less than other genres, so there's an small upside.
The last bastion to surprise my pantheistic music soul was Music Lab, which yielded much joy w/ its progressive slant and, shock me, the occasional jam band that actually had some song 'n melody going on! It provided something hard to find for someone who owns over 10,000 CD's, countless LP's and listens to scores and scores of demos and new releases every week.
What is that? Well.....
SURPRISE. The surprise of the new and undiscovered charted out for me by others cool souls, whose lead this jaded, been around-the block music soul has a hard time believing someone else could provide for him.
I did the stupid thing and took the bait of re-signing up for a year at the old rates 3 or 4 months back. Busy life, just get it done, not think about it, save a few dollars. What a dumbass, the signs were all there.
I've had Little Steven envy since he signed on there----he's been such a great supporter of not only my own label but so many countless cool bands that embody the real, everlasting spirit of rock 'n roll I just feel *dirty* for letting the chance to drop XM slip by.
Well, I'm eating the subscription I paid for, relegate the portable device to my childrens' rooms and let them enjoy the insanely uninteresting and insipid children's programming let put forth on their two channels and look for the next decent Sirius deal.
I'm IN. Work yr marketing magic Sirius, I'm sooooo there.
Bob, I hope you gather up all the emails you'll receive and you can help place them on someone at XM, that one last soul locked away in the cleaning closet, who actually *cares*.
There is NO excuse for such a wholeale abandonment of the dream and vision that XM had. Except corporate commitment to being something they promised they would not be. Shameful. Sad. Downright pathetic. And let Sirius be put on notice to watch such exchanges and stay on watch.
A show like Little Steven's Underground IS heart 'n soul of rock 'n roll, don't mess with it or the other cool ones. If anything, look to add *more*.
C-YA, XM. It was nice...but not that nice. You could have done so very, very much better with your billions to allocate a few hundred thousand to work in some sustained(and new) really cool programming.
Terrestial Radio + XM = new boss, same as old boss.
Rawk, No Roll.
XM radio I have both XM and Sirius. There is no comparison. XM has the best selection, Best DJ's and the best programming. Sirius sounds like bunch of inexperienced people who just left college and didn't sober up. The quality is better on XM. I was not a regular listener to 51 and don't miss it. I like they change stations. It keeps things fresh. Sirius repeats its programming way more than XM.
Competition is good. Any of these two systems is way better than FM stations these days. Even Public Stations suck because I have to listen to their statements on politics and it is always about what the popular "they don't like" subjects. The people who run the country are always wrong. The way we live is always not good enough. Its bullshit and everyone wants to follow the negative path. All I want is undisturbed, good sounding, sounds that take me away from the crap. I can always listen to talk radio to get that junk.
Howard who cares.
Every station on Sirius sounds the same. Its like they gave them a program and said you can change 25% of what we tell ya. Bullshit. What I like about Sirius is they have the dedicated stations ie Margaritaville, Stones. I like that if I want to hear some of those guys I can. I have all the classic rock albums converted to cd's and files. SO I don't need the classic stations. I don't have an ipod cause I have a mp3 player. I can listen to what I want when I want.
Does anyone realize how much music there is out there and lots of it great. Do you realize what you don't hear?
After all of your hype about it, I got XM for Christmas. I don't even turn it on anymore unless I want to listen to a hockey game. I don't hear any of the music that I like. Just like the regular radio that I have not listened to in years.
Jeez Bob, how many people subscribe to your newsletter?!? You mention me, and I get all these emails "Bob Lefsetz mentioned you..."
Actually the XM handwriting on the wall was when World Zone and Ngomo (two of my favorite stations) got bounced to internet only. So they get replaced with French pop...okay, that's kinda edgy, but a large component of French pop is music from former colonies. You can get Zouk records in French supermarkets! And I'm not hearing that. And WTF with internet only? I have XM to Go...does me a lot of good, eh?
Music Lab..."the numbers weren't there"...when I was running Electronic Musician magazine, we had a record reviewer who was listed in reader surveys as being a favorite feature for only 5% of the subcribers. People thought I should get rid of him but I felt those 5% subscribed to the magazine pretty much because of him. If XM with all its channels can't take care of a few minority listenerships, what makes satellite radio different?
I'll keep listening because of the dance music channels (80, 81, 82, and 84); I can't get that anywhere else, except on the net. And my daughter likes 20 on 20. But yeah, the golden age of satellite radio has officially ended. We can all see where it's headed.
Seth Neiman (firstname.lastname@example.org):
I would love to get feedback on the channel I program for XM. XM 75 Hear Music. I'm not looking for any praise in your daily emails, just your personal feedback. We play a lot of new music and surround it with familiar music, attempting to introduce mainstream listeners to some of the great new music out there. New Music Hours at 7 and 10pm pacific.
Where could I write them a letter. This blows. This is one of the reasons I listen to xm, period.
And this was a station they used to help establish their identity. The
audience IS there.
It's not like they ever promote any of these stations, it's all word of
And what methods do they use to figure out an audience isn't there?
Totally disagree. Music Lab got canned b/c it wasn't any good.
What cracks me up about xm is they added another urban station called heat. That makes 4 hip hop stations and they all suck! I'm a fan of urban music, but how in the hell can you have four and not one be good??!
I think it's an enormous mistake with the deletion of Music Lab, to have no home for jam band or more aptly titled improvisational bands.
Phish, Dave Matthews, SCI, Allmans, OAR, Widespread, Galactic, soulive and many more down the line are clearly among the most consistent live drawing bands on the road in recent years, and maybe even more importantly, for the most part, represent the anti - establishment in terms of terrestrial radio and major label domination of the failing music industry. Why you would not want to align with and satisfy their fans is beyond me. In fact, in my opinion, opening that station up to have less prog rock (if any at all - never thought they went together well) and more RARE and LIVE tracks of the aforementioned, would have been the smarter move.
It's a real loss and I hope you and your associates will re-consider.
Thanks for bringing light to the XM Radio "Music Lab" change.
I called in my cancellation today. I have had enough of the monotonous commercials on the talk channels and the recent end of "Music Lab".
The elimination of Music Lab is just one more sign of the mainstreaming of what used to be good radio. Now, I only feel like XM is personalized to my needs when the holidays come around. I can choose between the sappy Christmas songs and the twisted ones of the Bob Rivers genre. Not worth $10 a month when I can get "The Restroom Door Said Gentlemen" for sale for 99 cents on iTunes.
Aside from sports enthusiasts and real-time news junkies, how can XM and Sirius compete in a market over run with portable MP3 players and podcasting?
Short Dish. I live for the day my contract expires and I can go back to Direct TV.
Posted by: jim | Apr 25, 2006 9:08:31 AM
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