Will Satellite Radio Last?

That's the question that Electronic Business is asking and with little foundation behind the question other than the fact that they didn't renew after a 3-month trial period. Yes, the stocks have been pummeled lately, but that's based more off of investor confidence (after a series of negative events) and not whether this is a viable business model.

Satellite radio's biggest barrier to entry is that you need to pay for it.

But this is a thought that will eventually disappear, just as it did for TV. People have no problem paying for movies (Netflix isn't necessarily cheap in comparison). They have no problem paying for music (CD sales still dominate, regardless of RIAA whining and higher prices). Cable. Satellite TV. Mobile phones. Broadband internet. The list goes on.

There lies another issue. The consumer is under attack from different services to pay a monthly fee. Satellite radio has the benefit of no contracts and the cancel-at-anytime freedom. But everywhere we look, there's another "service" looking to get us to pay a reoccuring monthly fee. Eventually, Joe Sixpack is going to reach his peak in the number of subscriptions he's willing to have auto-billed to his credit card. There's a hidden gold mine in annual or lifetime offers to current subscribers - SIRIUS and XM should pursue that.

So where's the problem? Why are we still asking whether "satellite radio will last" this far into the game? Because people still think of it as "just Radio." And many people aren't willing to enter in a credit card - or even buy new equipment - that is for "just Radio."

Both satcasters need to take a long hard look at how they're positioning the product. Is it really the "Best Radio on Radio" or "Beyond AM, Beyond FM?" Or is it something more? As the product evolves with mobile TV, interactive personal audio players, voice recognition, parking assistance, traffic monitoring, weather service and a whole slew of new widgets in the works - the XM and SIRIUS look more like "Satellite Services" than "just Radio" - and it all revolves around one thing: your car.

So will satellite radio last? Absolutely. But not in the form of "radio" - but in the form of "the connected car."