How XM Radio is About to ROYALLY Screw Themselves

XM Radio has no idea what they’re about to do to themselves. Before I tell you what that is, a brief history lesson:

There’s a huge scandal going around right now regarding the corporate censorship of hosts of Opie and Anthony, a popular show on XM radio. The entire fuss is over a bit they did where a “bum” talked about raping the president’s wife, Secretary of State Rice, and Queen Elizabeth. When they were suspended for it, thousands of angry customers called in to XM radio to cancel, not necessarily in support of the show, but because XM advertised that its content is not censored.

To the surprise of many, people are now reporting that XM is not actually canceling accounts, but rather giving free credits (a few months). People are angry because they are trying to make a statement with their cancellation, and XM is trying to float their subscriber numbers for their shareholder meeting on the 25th.

I say, awesome. Let them commit fraud or whatever. If they really do keep these customers around for the next few months, there is a great opportunity to get even.

My advice is simple: Wait for the credits to expire and then issue a chargeback the moment they bill you. When they contact you about renewal, do not respond, react, type a reply, or say a word. Just hang up, delete the email, or trash the letter. If they are stupid enough to bill your account without your explicit consent, you have the full right to issue a chargeback, and your bank will side with you. Simply call up your bank and tell them you canceled the service months ago.

Most people don’t realize it, but chargebacks have huge penalties associated with them. While fraudulent chargebacks don’t really count in, a legitimate chargeback hurts. It usually comes with a $10-$30 processing fee. What people don’t know is that if a merchant has a large spike in chargebacks, they are assessed a secondary fine. This is in place to curb large scale merchant fraud or shoddy business practices where merchants take processing fees into account as a cost of business. This secondary fine is not as small and friendly as the processing fee…

I’m talking about millions of dollars in penalties applied directly to XM’s bottom line.

So be happy they haven’t canceled your account. Mark it on your calendars and screw over XM in six months.

Microsoft Bought aQuantive for 6 Billion!

Today, Microsoft’s made its biggest purchase in its history for six billion dollars in an effort to out-flank Google. They purchased aQuantive, a competitor in the online advertising industry that parallels – but doesn’t directly compete – with the pay-per-click model. The price is double what Google paid for DoubleClickaQuantive is the largest online ad agency.

DoubleClick had a yearly revenue of $300 million versus the $442 million for aQuantive. The price for aQuantive was definitely not cheap, considering its net income from last year (“profit”) was $54 million. Ouch! What a deal for aQuantive!

aQuantive’s headquarters are in Seattle, making it a good buy in terms of geographic proximity. But was it a good buy overall? The answer isn’t clear.

Microsoft paid over double the total valuation of aQuantive ($2.8B). That’s a sizeable premium. In other words, the millions of investors across the world put the price tag of aQuantive at roughly $3B and Microsoft came in and bought them for over double. Microsoft must know something that nobody else in the world realizes — or they were getting really desperate to out maneuver Google.

But, if there’s one company in the world that recognizes the immeasurable value of being #1, it’s Microsoft. They bought their way into the top of the pay per action market, and they plan to abuse — er, excuse me — use it.

Still, I think it’s dumb that an operating system manufacturer is buying ad agencies. Just think of the parallel: Apple/Novell/IBM buying aQuantive. It makes no sense. It only makes sense because Microsoft is a monopoly trying to retain its power.

The largest purchase in Microsoft’s history is not a competing software company. It feels as if Microsoft has really strayed from its core vision ever since Billy-G left the helm. Ballmer, I hope you know what you’re doing…

But what do I know, right?

Update: here’s a history lesson.