03/10/2006 07:58:00 AM 
(1) 
(1) This move could also prove to be massively damaging for the brand, especially as a large part of its appeal lies in its ad free environment.
The fact greedy big radio saturated the airwaves with ads, presented XM with a reason to be in business. Obviously, XM is way more than that, but just ask your friends who use satellite radio how many of them switched over to be ad free.
XM's move was probably not made without a great deal of thought, but given how fast these businesses are draining cash, it must be hard to keep turning down the financial opportunity.
Brands like iTunes and their competitor music subscription services must be grappling with the same issues.
How can they make money and avoid taking cash from "big Ad"? These businesses are run on wafer thin margins, and like XM, could easily be tempted.
Clearly, its good for the TV networks to currently be hedging their bets between the traditional advertising supported business model and these new forms of distribution.
However, the future is all about simple economics.
When does the "tipping point" occur when so many people switch over to the sub model that it leaves the advertisers with no audience in the traditional model that ad rates have to decline?
Does there then come a point when greedy media sees itself with a huge subscription audience and no advertisers and isn't it then just too tempting to turn the ad tap on?
Who said advertising was dead?
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You're right. I've seen before where companies have promised the subscription model only, and have had to backtrack on the promise and lure of the implications. While in the cases I know of, it hasn't hurt the brand, in this case, because of being a media company, it could turn a lot of people off and they may turn XM off.