SiriusXM Pandora is exploring the idea of increasing the cost of its various satellite and streaming radio tiers as the company rolls out new hardware and integrates additional features into the service.
The affirmation was made by SiriusXM Pandora’s Chief Executive Officer Jennifer Witz at an investor conference last week, where she affirmed that the company adjusted the rate of some of its promotional packages within the last year.
SiriusXM offers several different programming packages with a variety of prices, including a general music and entertainment package that costs $18 a month and a premium package that includes sports play-by-play and access to Howard Stern’s content for $23 a month. Recently, the company also introduced a “Music Showcase” package that excludes sports, Howard Stern and comedy channels at a price of $13 a month. Most packages also include an additional music royalty fee that can tack over $3 a month to the cost of the service.
Some savvy customers have been able to take advantage of special retention rates that are offered to subscribers who contact customer service with a threat to cancel their subscription. The retention prices are generally much lower than the advertised price of a subscription — one package costs as little as $6 a month with the music royalty fee included — and customers are able to lock in those prices for anywhere from six months to a year.
Those days may soon be coming to an end, Witz said, as the company looks to recoup costs associated with its investments. Since raising the prices across some of its promotional packages, Witz said the company saw a slight increase in churn — customers who actually go through with canceling their service — but that the increased prices were better for the company’s bottom line.
“It was better for revenue, so we’re constantly looking to adjust, so we can build overall revenue growth,” she said.
Witz said she was aware that some on-demand audio services like Apple Music and Spotify are priced lower than what SiriusXM Pandora offers, but that the company is laser focused on reaching younger customers with better technology and more live programming. One technology the company is heavily invested in is the SiriusXM 360L platform, which fuses its traditional satellite radio channels with an expanded lineup of hundreds of online-only streams curated by SiriusXM.
“With 360L, which is going to have significantly more capacity to be able to provide more content and features to customers that enhances the value, I think it gives us more opportunity to perhaps raise rates going forward,” Witz said.
If SiriusXM does raise the cost of its satellite radio subscription, one way customers can save money over the long-term is by switching to a streaming-only plan. Nearly all of SiriusXM’s satellite radio channels are available on its streaming platform, which also includes access to over 300 online-only streams of music, talk, comedy and sports programming.
SiriusXM’s streaming plans cost as little as $5 a month for the music showcase tier and goes up to $11 a month for the SiriusXM Platinum package that includes Howard Stern and sports play-by-play. The Platinum plan also includes access to the premium version of SiriusXM’s podcast platform Stitcher and the ability for streamers to create their own personalized, artist-specific stations that are powered by Pandora’s technology.
The bulk of SiriusXM’s customer base still comes from cars, though, and Witz said the health of the company is in some ways tied to the auto market, which has slowed since the start of the coronavirus pandemic two years ago.
“We are continuing to invest in, and I continue to think, [digital] is going to be a bigger portion of our subscriptions going forward,” Witz said. It’s going to make us less reliant on the auto industry.”
It will take some time to get there: SiriusXM originally had a target of having 80 percent of its new customers using SiriusXM’s 360L platform by 2025. Last week, Witz acknowledged the company is going to miss that goal by a few years, but says by this year, the number of new customers on the SiriusXM 360L platform should be around 30 percent.
Getting customers on the SiriusXM 360L platform is important, because it will allow subscribers to have a seamless SiriusXM experience no matter where they listen to the radio — be it in their cars, on their phones, on smart speakers or on smart TVs. It will also open the doors for SiriusXM to further integrate its other platforms, including Pandora and Stitcher, in cars.
“We’re really focused on improving the foundational aspects that will support both 360 and digital and even the satellite side of our subscriptions,” Witz said.