Howard Stern made Sirius Satellite Radio into a multi-billion dollar business. But can he pull a repeat performance with smartphone applications?
HOW-ARD! HOW-ARD! HOW-ARD!
Such is the mantra of the legion of Howard Stern fans, who dutifully followed him on his exodus from syndicated terrestrial radio in January 2006 to satellite radio, almost five years ago. At the time, Sirius Satellite Radio was a fledgling competitor to FM radio and only had about one point eight million subscribers in the second half of 2005. In the second half of following year after Howard joined, in 2006, it more than doubled to 4.6 million subscribers.
That was then, and this is now. Today, Sirius XM boasts over 20 million listeners, and much of that success can be attributed to Howard Stern, the self-professed King of All Media.
Obviously, Sirius has inked other talent deals that have helped it along the way, such as its agreements with Martha Stewart, Jimmy Buffett and with sports organizations such as the NBA, NASCAR, NHL and the MLB. However, without having brought Howard on, it is highly unlikely that the company would have had the critical mass in subscribers it so desperately needed to ink many of these other deals.
Love him or hate him, Howard Stern is a force of nature. And at the end of this year, his five-year contract with Sirius runs out.
At the UBS Global Media and Communications conference on December 6, the burning question of whether Howard is going to stick around or move on to yet another frontier -- such as Apple's iTunes was posed by analyst Omar Jaffrey. Executive Vice-President and Chief Financial Officer of Sirius XM, David Frear, had this to say:
Okay. So Howard has been just a great partner for us over the last several years that he was great right from the initial announcement that I think running around and doing lots of appearances on David Letterman and talking to the press and magazine covers and all the rest is not necessarily the way that he wants to spend his time, but he has been a fantastic and cooperative business partner all the way along. He puts on a great show and creatively we think he is very happy, doing what he is doing at Sirius XM.
That being said that Howard's show today is unlike most of the other third-party programming that we have. So the NFL creates its content for a totally different purpose, right, than satellite radio. It's really created for what happens in the stadium and what happens in the TV broadcast rights. And so the fact that they can extend that product to another platform is kind of an upside for them, it's in some ways like Sirius extending its listening to the Internet and smartphones, it's a product line extension.
Howard's a whole different thing, that he could decide that he doesn't want to get up at that early in the morning, that he'd like to do a shorter show that he would like to do with someplace else. We'd be very surprised if he decides that terrestrial radio is a better place creatively for him to be.
The Internet, whether it's through iTunes or through something else, always a possibility, but you have the same issue, which [what was it] Jeff Zucker calling to all those years ago, turning analog dollars into digital dimes.
Monetization on the Internet is still a very dicey game, right, so there's lots of talk at this conference area, it was very good this morning on CNBC about it talking about over the top and the content creators needing to be very careful about, what kind of monetization rates that they create as they move video distribution on to new ways of getting to consumers.
Howard goes -- is our content creator, he's kept the same decision to make. We're hopeful that Howard will remain with Sirius XM. We think he can have a great future with us. It's certainly been a great relationship in the last few years. His last live broadcast before the holidays is December 16th, and then he takes his regular two-week vacation and we continue to talk with Howard and wait to see what he ultimately decides to do.
Sirius' CFO may want to engage in a bit of "Fear-mongering" about the challenge of monetizing content on the Internet, but the bottom line is that iTunes and the App Store is a massive business for Apple, with a huge built-in audience, with tens of millions of iOS devices shipped worldwide. Add Android Market and Amazon Video/Amazon MP3 into the mix, as well as the BlackBerry App World, and you've got access to a potential audience several times the size that of Sirius, who can pick and choose exactly what content they want to subscribe to.
Should Howard decide to leave Sirius for the green pastures of the Internet, and take his millions of listeners with him, the question remains what form his delivery mechanisms will take and what restrictions Howard will likely have to cope with or get around in order to satisfy his need for a censorship-free environment. Censorship was of course the prime motivator that sent him packing from Infinity Broadcasting and away from the constant examination and fines from the FCC to his completely uncensored Sirius channels in the first place.
That being said, Apple already provides for a mechanism to deliver explicit content via iTunes via user enabled content controls, so censorship at least in terms of the audio in podcast form should not be a problem. However, delivery of live audio content would likely have to be in the form of an App, and that's where Howard might run into some issues at Apple.
Recently, Apple made some changes to its App Store that eliminated "Single station" streaming apps, so Howard's App would likely have to take the form of a "Howard World" that included other content besides the subscription audio stream which would have to be accessed via an in-App purchase.
Of course, it could also be argued that any streaming audio content originating from "Howard World" or "Appa-fooey" might not be classified as a normal terrestrial radio stream. Additionally, Apple hasn't been known for making reasonable, consistent decisions regarding app approvals, and I doubt that Howard would want to take the chance on Steve Jobs shutting him down before even getting out of the gate. Back-door negotiations with Infinite Loop are almost surely in store if he wants to swim in the turtlenecked one's distortion field.
But Howard isn't just radio, he also produces a significant amount of video content with Howard TV, which is currently produced in conjunction with Sirius and is available currently on Cable TV.
Should he continue to produce new video content if he discontinues his relationship with the satellite radio service, and want to distribute it on smartphone and other multimedia devices such as the iPad or the Apple TV in addition to traditional pay TV distribution channels, he might not be able to use the App Store or iTunes for that content even if he produces his own streaming application or service, a la Netflix.
That being said, you can certainly download many (but not all) R-Rated films on iTunes, but Howard frequently pushes the limits of what might be acceptable in Cupertino and in the Terms of Service for iTunes and the App Store. For example, just Google "Howard Stern" and "Sybian". It could make for a very rough ride.
That was such an awful metaphor, I'm so ashamed of myself.
For those juicy bits, he might have to go create his own side-loaded Android or BlackBerry apps -- much how MiKandi produces explicit content for Android. And if it absolutely has to work on an iOS device, HTML5 video is certainly an option for cross-platform compatibility, so some sort of mash-up that allows iOS devices to access explicit content outside the standard app environment using Safari may be required in order to satisfy Apple's terms of service or to circumvent it entirely.
If Howard does decide to jump ship and enter the world of smartphones and streaming media, it will certainly be interesting. And If he can repeat his previous success as he did with Sirius, he'll be the King of All App Stores as well.
Are you ready to welcome Howard Stern to your smartphone, media player or tablet device? Talk Back and Let Me Know.