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Wednesday, March 28, 2007

weighing in on the sirius / xm merger

Man, it can be hard to keep your head above water. You’ve got lobbyists complaining to the SEC, the FCC complaining that the sat radio licenses are (already!) being violated, the National Association of Broadcasters running copyright-infringing advertisements about anti-trust infringing mergers, and advocates on both sides screaming “pork!”

So what’s the question behind the Sirius/XM merger? It’s simple, really. Here’s how it boils down for the consumer (you, me; you know, most of us):
  1. Ballyhoo! The merger will create a monopoly on sat radio and allow Sirius/XM to increase prices and ignore the consumer’s implicit “rights” (in all such cases of consumer-scare-ism, “rights” translates to “low prices”).
  2. Huzzah! This way, Sirius and XM will standardize the industry and combine their programming (football and baseball on one device, wow, damn!). How could it go wrong?
Sigh. Like I said, this is a confusing situation. Personally, I find myself on the side of Ballyhoo!, for what I think are good reasons.

First, this will be creating a monopoly. There’s no two ways about it. I’ve seen arguments trumpeting terrestrial radio as a competitor of satellite’s, but the difference in technology, delivery, and, most importantly, advertising makes comparisons between the two an apples-to-oranges job; the kind of punditry reserved for CNN or Fox News. I’d like to ask users of sat radio to head back to the old days of terrestrial broadcasts for one commute, and then tell me it’s the same industry. Same thing goes for MP3 players or internet radio. There appears to be some confusion between “listening to things” and “market.”

So monopoly it is. While this doesn’t immediately bode poorly for those of us who already use one of the services, I don’t need to tell you about its potential. A big part of this country’s history is antitrust litigation; you’ve all heard about it, and whether or not you agree with it, it’s all about protecting your “rights.” Matters of principle aside, this merger holds real threats, especially to the SEC who will later be tasked with breaking everything apart again, just like those FCC licenses said should happen.

Second, this will standardize nothing. The industry will eventually develop another competitor, either when the SEC smacks it down or when Rupert Murdoch blesses someone’s coffers with enough cash money to overcome what will be a MASSIVE barrier to entry. Meanwhile, Sirius/XM will have standardized their own proprietary technology (whoo). Standardization is not something that comes from one place, since it initially reduces potential profit for all of those proprietary monsters out there (hello, Sony? Listen up, m’kay?). It has to happen when an industry isn’t syncing the way it should be. This industry will have no one left to sync with.

Finally, competition is good. How very un-revolutionary. But the reason prices have stayed low is that even the sat radio Oligarchy of Two couldn’t risk inflating prices. That one hasn’t massively undercut the other and pushed them out of business is surprising, but also illegal so I guess that makes sense for now.

And that’s what I think. I like pretending to be an expert.

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Blogger Rich said...

Thanks for the image.

3/28/07, 4:29 PM  

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