You know that free trial of Sirius XM satellite radio that comes with all GM vehicles in North America? Well, General Motors was paying the satellite radio company a fee for those evaluation periods — something that it will stop doing in the fourth quarter of 2013.
The discounted subscription rate was equivalent to roughly $20 for 3 months of service, and The General was one of the only automakers that had such a deal, as most other OEMs don’t (and didn’t) pay a fee — instead opting to be an “unpaid promotional partner” — in SiriusXM parlance. In exchange for the fee, Sirius XM gave GM a revenue share on the radio going forward that was about $5 per month for the life of the radio — as long as the subscription was active. In fact, the deal was crafted in such a way that GM received the revenue share from SiriusXM even on second or third owners of the GM car. (Sounds like an affiliate agreement, no?).
Well, by the end of this year, GM will cease paying XM the $20, and will no longer be eligible for the revenue share of new subscribers. This will decrease GM’s cost per vehicle on the front end, but will also decrease the revenue it receives per vehicle post-purchase.
The GM Authority Take
We imagine that the new deal with SiriusXM will be more financially favorable for The General going forward — hence the reason for the new arrangement, while having a few specific implications on Sirius’ business (read more about those here). Meanwhile, the move is not expected to affect GM customers or their access to trial periods to SiriusXM satellite radio with the purchase of new or Certified Pre-Owned GM vehicles.