Statesman writes "Only a little over a year ago, the FCC approved the merger of XM and Sirius satellite radio companies and the combined stock was trading at $4 a share. Despite being a monopoly — or perhaps because of it — the company is failing. They are losing subscribers, the stock is now trading around 22 cents a share (a 97% decline), and they have written off $4.8 billion dollars in stock value. So, what happened? The CEO is blaming pretty much everyone except himself and his business model. But is pay-for-bandwidth even a viable business plan anymore? With millions of iPhone and gPhone users out there, free streaming audio applications like FStream, and thousands of Internet radio stations to access, the question is: why would anyone want to pay for proprietary hardware and a limited selection of a few hundred stations all controlled by one company?" Read on for the rest of Statesman's thoughts.Statesman continues:
"It seems like the pay-for-broadcast business model is fundamentally flawed. First, satellite radio is a misnomer; if you are listening inside a big building, chances are you're really using WiFi radio, not satellite, which requires line-of-sight to the sky. In this mode, XM/Sirius offers less selection and higher cost than an iPhone and streaming audio client. Second, a monopoly is a monopoly. Sure, you can get dozens of ClearChannel stations in some markets, but after a while it does not matter whether they are country, top 40 or easy listening. They all have the same format of hypercharged 'personalities' and lots of ads. By contrast, the iPhone and streaming client can access thousands of stations from thousands of providers worldwide. Finally, you may say that an iPhone and service agreement are expensive compared to a satellite radio subscription, but if you already have the iPhone, the cost of adding a stream audio application is zero. And the iPhone is cheap compared to a cell phone plus an MP3 player plus a laptop plus internet access. Bottom line: a year after being granted monopoly status, Sirius is all but bankrupt and the satellite radio business model is dead. Time for the FCC to think seriously about making better use of this bandwidth."