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The “Free” Future of Satellite Radio

From Inside Radio:

Sirius drops below $1 as subscriber growth evaporates. Selling a pay radio service is an uphill battle in a decent economy, but when things get tough as they are now it’s an even steeper climb. That’s one reason Sirius XM Radio says it will add only two million subscribers next year, bringing it to 21.5 million users — it’s smallest increase ever. Its stock closed at 98 cents yesterday — its lowest level in more than five years.

My prediction:

Some form of satellite radio will be free.

Some form of Howard Stern will be on a free radio near you.

Will Mel buy radio stations or simply license content to them?

One or the other.

Watch and see.

This is actually very easy. You simply handicap the product for free distribution and create a version of the brand – or a new brand – that does not represent “pay radio.”

For a music channel commercials are a “handicap.” Although music channels are hardly satellite radio’s real opportunity.

For Howard Stern, an FCC-friendly once-over is a “handicap.” So is a shorter show or a day-old one. Or all of the above.

Handicaps reassure subscribers that they’re getting something for their monthly premium. Meanwhile Sirius XM should expand subscriber access to content and engagement in ways that further justify the premium (I will not go into details here).

If you are in the content business, your revenue-maximizing obligation is to spread that content across every available channel of distribution. You don’t build walls to keep the audience out or the audience will choose to stay out.

And I call a mere two million new subs in 2009 “choosing to stay out.”

Watch and see.

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