Serious Threats to Sirius Radio

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The idea for "Serious Threats to Sirius Radio" came from BusinessWeek reader Richard Hunsaker, a project manager at a non-profit health organization based in Northern Colorado.

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Custom Programming

Aside from Stern, some of Sirius' 69 music channels have already been replicated online. Fans of the radio customization site Slacker say they have reconstructed 17 channels, including U.S. Country (XM17) and Beyond Jazz (XM72). While Slacker became available on mobile phones only this year, as much as 40% of its 1 million monthly listeners comes from mobiles, says Jonathan Sasse, Slacker's vice-president for marketing. The service is free for those willing to listen to 30 seconds to two minutes of advertising per hour. For $3.99 a month, Slacker has no ads and allows song skipping.

Meanwhile, iPhone users can now listen to talk shows through a service called Stitcher. (It is launching for BlackBerry (RIMM) devices in April.) The San Francisco company's software grabs RSS feeds from online podcasts, such as those from Oprah, Fox News (NWS), and BusinessWeek, and allows users to "stitch" together custom radio channels of news and talk shows. Stitcher users listen to 5 million minutes of radio a month, up from 1 million last August, and is on track to reach 1 million users by the end of 2009, says Mike Ghaffary, Stitcher's vice-president for business development.

Another option: Foneshow lets any phone with text messaging capabilities to catch custom talk radio programming, like Bill Press and Thom Hartmann. Whenever a new show segment becomes available, your phone receives a short text message with a link. You hit "Send," and your phone starts streaming audio, which you can pause, skip or forward to a friend. Foneshow sells advertising, unlike Sirius.

Marketing Muscle

But there's an ads-free option: This summer, a Michigan startup called Myine Electronics, begun by two former satellite radio hardware engineers from electronics maker Delphi, will launch a device called Abbee. The $250 gadget scans FM stations and records songs onto an internal hard drive while erasing all commercials. The gadget has a cable for use in a car, the domain of satellite radio.

How much these innovations erode Sirius's advantage remains to be seen. Sirius has marketing muscle that most startups lack. And Maffei notes that online providers have yet to formulate a path to profitability since most have no steady subscription streams. (On the other hand, Sirius XM lost $248.5 million in the fourth quarter.) "Internet content providers like Pandora are showing enormous growth," Maffei says. "What their long-term success is in mobile venues and automobiles remains to be seen."

But in many respects, that statement could apply to Sirius XM—as listeners like Der demonstrate by going online.

Business Exchange related topics:
Satellite Networks
Mobile Applications
BlackBerry Devices

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.