Creative Destruction: Satellite Radio Edition

Sirius-XM appears poised on the brink of bankruptcy this morning, which should come as a surprise to no one and will present an opportunity for some.  The economics of the business were off from the start: it relied on expensive satellite technology governed by a morass of regulation, it had a costly top-down content model but, most critically, it entered the market just as its foundation were undergoing a tectonic shift.

In short, less people are listening to radio overall and the majority of those that are, are doing so at homes and in offices equipped with broadband Internet technology that offers an infinite selection of channels for free.  Gary Kim has a thoughtful pre-mortem in today’s TMCnet which follows the satellite industry.

Now, it appears satellite radio’s one and only stronghold, car listening, may soon fall, as car makers introduce in-vehicle wifi.  The promise of wi-fi has underdelivered thus far, having been tangled in competing standards and limited access to the radio spectrum.  But with new frquencies on the analog spectrum set to open up next week, we may be moving toward a new burst of innovation. Those who want to bet on the next big thing should take note and seriously study up….