The Children of Sputnik

The Children of Sputnik

A few weeks ago, according to this news story, Wisconsin’s Attorney General J.B. Van Hollen asked Federal regulators to block the proposed merger between satellite radio companies XM and Sirius. In doing so he became the newest voice to join the already crowded chorus decrying this merger as a bad idea. 
 
XM and Sirius broadcast music, news and entertainment programming from earth orbit, down through the ether, to receivers in North America and computers worldwide. Simplifying and typing out what Sirius and XM do made me poignantly aware of how fascinating the technology involved really is. Ham-radio enthusiasts tuning into Sputnik-1’s droning beep as it passed over head in 1957 could not have realized that either they, their children or their grand-children would be pulling down digitized radio shows from space vehicles that can be metaphorically described as Sputnik’s direct descendants. Just as I had no idea when I first purchased Neil Young’s Everybody Knows this is Nowhere on vinyl in the early 1980s that I would eventually own that wonderful piece of music on cassette tape, compact disc, and finally as digital music files stored on my computer. To look at these technological leaps another way it would take over 13 and one-half 3.5 inch floppy discs (the primary storage medium of the PC’s 1980s infancy) to hold an MP3 of Neil’s Cowgirl in the Sand.
   
Forgetting for a moment the sheer technology involved, Van Hollen (and the other commenters) would seem to have a compelling argument that cuts to the core of anti-trust law. If the proposed merger is completed there will be only one satellite radio provider where there used to be two: there could not be a more cut-and-dried example of a monopolized market. As such, there are certainly bigger issues surrounding the XM/Sirius merger than whether Siruis’ Howard Stern or XM’s Opie & Anthony will occupy the coveted morning drive slot and if the Sirius Grateful Dead channel, number 32, will continue to broadcast after the merger. 
 
However we must return to a discussion of technology because that is the core of the arguments in favor of the merger. Supposedly, XM and Sirius are not only competing with each other, they are competing with other potentially portable music delivery systems. Satellite radio allegedly also competes with digital music players, terrestrial radio, internet radio and HD radio, not just with itself.
 
It seems obvious how other broadcast media can clearly provide competition for Satellite radio, but how do MP3 players provide such competition? Perhaps they in fact do not compete. When an individual plays their MP3 player, even in shuffle mode (the play format that arguably most closely mirrors satellite radio) they remain constantly aware that they are listening to their own music collection. When that same person tunes in to satellite radio they are listening to someone else’s music collection – participating in the time-honored illusion that it is the DJ’s collection when in all reality it is a general manager/programmer’s focus-group vetted playlist. The issue is one of ownership – listening to your own music or someone else’s. The argument would conclude that, unlike a radio, an MP3 player can never completely surprise a listener. 
 
Yet there remains a technological counter-argument: downloaded individual songs or albums are not the only media that MP3 players can reproduce. Podcasts are downloaded to an MP3 player but contain music and/or talk that mirror a radio broadcast – hence the fact that each end in the suffix “cast.” Podcasts, like more traditional broadcasts, maintain the same ownership illusion that lends radio it’s charm – the element of surprise has returned. And, since many podcasts are created by home-brew hobbyists, ownership may not be an illusion at all. The show may actually represent the broadcaster’s taste with the songs honestly culled from the broadcaster’s collection. Are MP3 players then, with podcasts, not only competing with satellite radio, could they be doing it better, beating the medium at its proverbial “own game?”
 
For a much more scholarly assessment of FCC rules, broadcast mergers and antitrust, see Fox and Fox, Corporate Acquisitions and Mergers, §18.05, Regulated Industry Mergers Not Subject to Exemption.*
 
* Links to content on lexis.com (subscription required)