There doesn't seem to be anything wrong with Sirius XM Holdings (NASDAQ:SIRI) these days, but it doesn't mean that it's above tweaking its model. The satellite radio provider offered up some interesting comments during last week's blowout quarter in discussing its pending purchase of a minority stake in Pandora (NYSE:P).

"We really want to get under the hood on how the free business works," Sirius XM CEO Jim Meyer said during last week's earnings call. 

Why would Sirius XM care about a free ad-supported business model? It's generating 28 times more subscription revenue than it is ad dollars. Sirius XM recently topped 32 million subscribers, with 26.7 million of them perfectly happy as self-pay accounts. There's more to Meyer's statement, of course, but if Sirius XM wants a crash course in entertaining freeloaders, this would be a significant and pretty brilliant move.

Eminem hosting his radio channel on Sirius XM.

Image source: Sirius XM.

We want the airwaves

Existing subscribers should not be expecting a price break anytime soon. Sirius XM has been able to inch its rates and music royalty fees higher over the years, and churn has held reasonably steady in response. However, it's clear that there is a large market that Sirius XM isn't presently addressing.

A subscription to Sirius XM is a compelling purchase for active drivers, explaining why it was originally embraced by truckers before consumers took to the platform. A subscription is obviously less of a value to those with short commutes, and let's not even consider millennials that have bypassed auto ownership entirely. If Sirius XM is going to toss out a bigger net to reach those radio buffs it will have to think outside of the dashboard box. 

Sirius XM isn't afraid to give its product away within reason. It routinely offers two-week previews, turning on all inactive receivers as a way to win over new or former subscribers. One can argue that it would be a good idea to keep at least some of its channels free permanently -- keeping the attention of its non-subscribers close -- if it wouldn't ruffle the feathers of antitrust regulators.

However, the biggest reason to bone up on Pandora's model is that Sirius XM's streaming platform can use some help. Sirius XM can't afford to offer its streaming app at a discount. It would eat at its higher-priced receiver-based plan given the growing number of drivers with smartphone-tethered car entertainment systems. However, launching a small subset of its content and perhaps leaning on its growing archives of exclusive content could work as an ad-supported product for folks unlikely to ever become conventional paying subscribers.

Sirius XM is doing things right. It has spent more than a year talking up Pandora as a buyout candidate, but now it's leaning on it to glean more information on how the model works. There's still a chance for an outright acquisition, but don't be surprised if Sirius XM uses its minority stake in Pandora as a springboard to compete in this market with its own well-researched offering.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Pandora Media. The Motley Fool has a disclosure policy.