As XM and Sirius continue to evolve, it looks as if commercials will become more and more prevalent on the satcasters' stations. Already, XM has altered its slogan of "100% commercial-free music" to having the "most commercial-free music channels." Last month it was revealed that ads would be placed on Clear Channel-controlled XM stations as part of the companies' agreements.
Gartner Research analyst Laura Behrens told Business Week that she expects that the satcasters' programming will likely resemble traditional, terrestrial radio within the next five to ten years. "Eventually, [both satellite and terrestrial radio] are going to get more similar as they evolve." Since neither company has turned a profit yet, Forrester Research analyst Ted Schadler says that both "have to be looking for all revenue sources, and ads are one of them."
XM SVP of Sales and Marketing D. Scott Karnedy tells Business Week, "Advertisers were concerned about mass. When we broke through six million subscribers, we saw that as a tipping point [with advertisers]." In 2005, XM tripled the amount of ad agencies it was involved with as ad revenues have skyrocketed in the past two years, reaching $20 million last year. Karnedy says that XM "can't keep up with the demand." The company expects to up its amount of ads on its talk channels in the near future.
As for Sirius, ad sales grew to $6.1 million last year. The satcaster is also considering increasing the spotload on Howard Stern's show from six minutes per hour up to nine, reports Business Week.
Stanford Financial Group analyst Fred Moran tells Business Week that he predicts both satcasters will bring in 10 percent of their sales revenue via advertising by 2011. Sirius predicts they will reach that amount in the next few years, though advertising only makes up under one percent of their current sales.