In article ,
Andrew Gideon wrote:
I do wonder, however, about how
$12/month is going to sustain the contracts for tens or hundreds of
millions of dollars for on-air talent; at some point, there has to be a
line in the sand for the providers.

Keep in mind that, aside from acquisition costs, new customers cost
nothing. That is, the infrastructure is the same for one customer or one
trillion customers. There *is* a number of customers where $12/month
covers that infrastructure.

This isn't true. New customers do not represent zero cost. While the
broadcast infrastructure may be able to serve "trillions" of customers,
the customer service, billing, maintenance, etc. all have costs that
increase as subscriber count goes up. In addition, the infrastructure
will require periodic capital improvements, both as subscriber count
grows and as technology changes.

That being said, it appears that both XM and Sirius are focused on
market share and not profit at this point. Of those two goals, only
profit is required to sustain a company, so there must be some long-term
objective that would benefit from market share position--such as
advertising sales.




JKG