With new-car sales down by double digits, Sirius XM is pursuing new ways to find subscribers, but the company is still expected to lose a million subscribers for the full year, according to Barrington Research.
Sirius XM launched a new iPhone app June 18 that shot to the No. 3 slot for all iPhone apps and was still among the top 10 Apple App store downloads almost two weeks later, extending its music platform to the smartphone. The new app streams Sirius XM content to an iPhone or iPod Touch and reportedly enjoyed more than 500,000 downloads in its first four days.
Also in June Sirius made inroads into the used car market, launching a promotion to offer service to owners of certified pre-owned Volkswagens.
Analyst James Goss of Barrington Research believes Sirius XM will return to positive subscriber growth once car sales rebound, but said, the gains may not come “in leaps and bounds.” He estimates a continued drop in subscribers for 2009 to 17.9 million, down from about 19 million, or a loss of a million subscribers for the year.
Analysts are now watching the Sirius XM iPhone app to see if users will become paid subscribers after their 7-day free trial lapses. After the trial, users must pay for a Sirius XM subscription which may include an extra $3 Internet fee (and Howard Stern is not offered via the iPhone app).
Just as in the car, Sirius XM on the iPhone will compete with free radio services such as Pandora.
In the duration, Sirius XM is taking steps to improve its financial footing. It successfully restructured its debt in a $525 million note offering that was broadened from $350 million due to high demand.
Sirius XM will also raise its rates by $1.98 per month on July 29 to compensate for an increase in music royalty fees, according to its customer service operators at its call center.