Satellite radio’s biggest problem: Slowing subscriber growth, compounded by the freefalling auto industry, where most of Sirius XM’s (SIRI) new customers come from, and fast-burning cash reserves. Another problem: Increasing, improving competition, such as Internet radio streams available via mobile phones.
One of Sirius’s Internet radio foes is bulking up: CBS, where Sirius XM CEO Mel Karmazin used to work. CBS (CBS) is taking over Yahoo’s (YHOO) Launchcast music service, the company announced today, and will re-launch it early next year.
MediaMemo: For CBS, this represents yet another bet the company has placed on digital music. The company already boasts 4.5 million monthly users for its Web radio offering, many of whom come from the AOL music service it powers. The Yahoo deal will add another 3 million users. That’s in addition to the audience that uses Last.fm, the Web music service it purchased for $280 million in 2007.
Via the Web, CBS’s partnership with AOL (TWX) for its excellent Apple (AAPL) iPhone radio app, Last.fm, and other potential technologies, CBS is building an impressive Internet radio offering. It’s not a huge, immediate threat to Sirius XM, which still has better, more developed technology and some exclusive programming, like Howard Stern. But it’s something to keep an eye on.