{Tennessean} Nashville may benefit if sat. radio's a hit

[danielbutler]

http://www.tennessean.com/business/archives/04/02/47235951.shtml?Element_ID=47235951



Saturday, 02/21/04
Nashville may benefit if satellite radio's a hit

By JEANNE ANNE NAUJECK
Staff Writer

Hundreds of stations on satellite radio offer music for every ear, from bluegrass to heavy metal and everything in between.

But it's all easy listening to Nashville's music industry, which forecasts greater exposure for artists and a potentially large new revenue stream as satellite radio enters more cars and homes.

If 2004 is the year that American consumers finally ''get'' satellite radio, it could bring exponential growth in subscribers and greater mainstream awareness to the paid service that tunes in dozens of static-free channels of music, without commercials, no matter where you drive.

That's good news for members of Nashville's music industry, many of whom have been skeptical that anyone would actually pay for radio after so many decades of getting it for free.

That described Rich Peluso — until he purchased a new car with an XM receiver and three free months of the service.

''Within two weeks I actually bought it,'' said Peluso, president of EMI CMG Distribution. ''I love that you can just push a button and see the artist and the title.''

Peluso said fellow executives in the record business also love satellite radio because free-form play lists could lead to greater exposure for many artists who can't get on traditional commercial radio, and that could mean higher revenues down the road.

Jay Clark, executive vice president of programming for Sirius, one of the two main satellite radio competitors, said listeners were just tired of hearing commercials on regular ''terrestrial'' radio.

''We have 61 different formats, 61 stations in this box that never fade out,'' Clark said. ''That does not mean radio is dead. But I think we have a different mousetrap.''

XM and Sirius are satellite radio's two main players. Both are publicly traded. New York-based Sirius had 261,000 subscribers by the end of 2003 and expects to reach 1 million this year. It costs $12.95 a month. Among its commercial-free music channels are seven that are country-oriented and three that play Christian music.

Washington-based XM boasts about 1.4 million subscribers and expects to double that this year. It costs $9.99 and has 68 music channels, now commercial-free, including six country and two Christian/Gospel.

XM's stock has been a favorite of investors. It was trading at $2.69 a share at the end of 2002 but has skyrocketed since then. It closed at $23.10 in trading yesterday. Sirius' stock has gotten a bit less play, closing at 2.88 a share yesterday, although that is up significantly from its 52-week low of 39 cents.

Both services also offer dozens of news, talk and sports format channels, which carry commercials. They each have licensed exclusive content from providers such as National Public Radio, The Weather Channel, C-SPAN, Discovery Channel, the NBA, NFL and NASCAR.

Such variety is worth paying for, say devotees of the service.

''They also said, 'Who will pay for television?' '' said Steve Buchanan, senior vice president of media and entertainment for Gaylord, which streams Nashville's WSM-AM 650 station and the Grand Ole Opry show on Sirius.

''It's about variety. The opportunity to listen to 100 channels is incredible.''

Gaylord's agreement with Sirius has many benefits, Buchanan said, among them exposure for country music and Gaylord's other entertainment and hospitality brands and promotion of Nashville as a destination. ''WSM is a great beacon for Nashville,'' Buchanan said. ''Ultimately, Sirius saw the opportunity to align themselves with both WSM and the Grand Ole Opry and the value they represent in country music. The relationship provides Sirius with a direct connection to Music City.''

Sirius also broadcasts acoustic bluegrass performances from the Station Inn and has a Nashville programmer working on its bluegrass channel.

XM also gets content for its half-dozen country-oriented channels from Nashville through a studio it installed at the Country Music Hall of Fame and Museum.

''From Tex Ritter to the most alternative Texas country you can imagine, it's all here,'' said Ray Knight, who programs three of XM's country channels. ''If it's a good song, we'll at least give it a shot and let the fans decide. We don't try to put on some attitude; we put on a show.''

Programming includes interviews with artists, who are asked to talk, play and sing. During one recent interview, country singer Joe Diffie mentioned that he had just made a demo of a new song. The deejay asked him to get it out of his truck and put it on the air.

''He couldn't believe it,'' Knight said.

Kyle Young, the Hall of Fame's executive director, calls the XM format ''kind of a throwback to the early days of radio.'' XM approached the board while plans for the new 5th Avenue building were being drawn up and committed to a capital outlay to build the studio.

Artists and copyright holders will soon see royalties from satellite radio. SoundExchange, which collects and distributes royalties from digital media, will send its first royalty checks this summer, said John Simson, the organization's executive director. Half of royalties go to the artist, half to the sound recording copyright owner.

''We're in a ramp-up period now, but starting in about 2006, we think satellite radio could generate $40 million to $50 million a year,'' he said. ''We see it as a wonderful growth area.''

Peluso, a record industry executive, said the logical next step would be the instant purchase of music. You hear a song that you like, you push a button to find out the title and artist, and then you buy it.

''That's the revenue model that satellite radio needs,'' he said.

[Wado]

If anyone can smell money it's those NashVegas Music Row execs...

[zumahans]

I couldn't disagree more. Music Row has ruined country music - it has hit a low-water mark in creativity and popularity. Sales are down - like all recorded music.

Music Row has pushed country music into the Lee Greenwood right wing. Blech.

[Wado]

I know these people, they may destroy what they touch but I guarantee if they see money in it they will try to move in with every asset they possess. My favorite country station in Nashville played music by bands you never heard of. These bands would catch the eye of Music Row, get signed, messed with until they were unrecognizable, get dropped by the labels when the CDs didn't sale and usually split up due to the intermal turmoil the labels created.

[Root Beer]

Damn that Shannon McCombs is a babe!

I don't think mainstream "country" music will benefit from satellite radio, but real country music bands and the alternative record labels who sell their music are going to start to make a lot of money. People will start to notice that there is more to country music than the soccer-mom crap they play on FM.

[catdaddy]