Report: Commercial Free Music Still Gives SiriusXM An Edge

Increasingly, newer competitors are entering the audio entertainment market and magnifying the competitive playing field for SiriusXM. The company has been competing with terrestrial ad-supported free radio for a long time, and now major Internet players are stepping up their efforts to compete with Sirius and get a piece of the pie, according to The Motley Fool.

Leading Internet radio service Pandora is surging ahead with growth in users, listening hours, and market share. In March 2014, Pandora saw its total users grow to 75.3 million, an 8% year-over-year increase. This increase in total listeners has translated into a 14% year-over-year increase to 1.71 billion listener hours in the month of March, both of which aren't exactly good signs for Sirius.

Pandora is already integrated across major auto makers in the U.S., and the company has begun playing audio ads on the in-dash infotainment systems of various cars. Clearly, more people playing Pandora in cars can translate into fewer paying subscribers for Sirius.

Also, Apple has seen good usage of its iTunes radio service. The iTunes radio service was originally laid out to boost digital music sales, which have been declining as consumers shift away from digital purchases to streaming options like Pandora and Spotify. Apple's large customer base can connect their Apple devices and use them in their cars like a makeshift infotainment system. Apple's music streaming offering is ad-supported, just like Pandora, and should lead to cannibalization of music downloads instead of growing music sales.

The Motley Fool notes however, the moat separating SiriusXM from Apple and Pandora is somewhat protected because the competitor offerings are ad-supported musical content, whereas Sirius provides commercial-free music and offers a larger variety of exclusive content including sports, popular talk shows, news, and comedy.