"Let's save Sirius," I suggested last week, and you certainly responded.

Opening up the comment box to reader suggestions, 77 posts have piled in as of last night. I promised to go over some of the more compelling ideas to get Sirius XM Radio (NASDAQ:SIRI) on track, so let's dive right in.

The gateway drug approach
The most popular suggestion, by far, is one that CEO Mel Karmazin himself has brought up recently: offering a few channels for free.

godmuscle2000 writes:

XM/SIRIUS could create 10 FREE CHANNELS with all the extra bandwidth. We would still pay for the extra channels. It's kind of like having regular advertiser television and then having HBO & Cinemax. The 10 channels would be all advertiser supported and bring in a HUGE amount of income of those wanting to advertise nationwide on those channels. We would also have more buying receivers to receive the free channels and more upselling to subscription services.

The move to activate dormant receivers is a great one. XM is finding that 53% of car owners with XM receivers are paying up after their brief free trials run out. It's a great conversion metric, but what about the other 47%? No one wins if costly dashboard gadgetry goes unused. General Motors (NYSE:GM) may cut off drivers who don't want to pay for OnStar, but Sirius XM doesn't need to cut off quitters completely.

Offering up a few ad-subsidized channels would be a smart move, though it may not be enough to sway fence-sitters to pay for a subscription. Why buy the cow when you can get the ad-splattered carton of milk for free? A good move may be the company offering its premium content for a limited run, as siriuslift suggests. For instance, make the next Fourth of July "Terrestrial Independence Day" and open up all of the non-explicit programming. Devote certain free weekends to rotating music genres. Unless substantial ad revenue can be generated with free ad-supported channels, the best approach may be to give the public a taste of what it's truly missing.

Selling the invisible
SnooperPooper offers up six great suggestions, including beefing up the ad variety and renegotiating the deal terms with regulators (who got Sirius XM into this mess, by delaying its approval until it's bumping up against huge debt repayments next year). However, one nugget really hit home.

SnooperPooper writes:

Create an aura of "unknown" upside for the stock and the company. Right now, subs for cars, homes, dumb mobile is totally predictable. The recurring revenue is nice, but bores analysts to death. Acquire a video / rich media play, think about other ways that you can leverage from pervasive networks. Create infinite upside in your service mix!

Premium radio will never be premium television. There is only so much that consumers are willing to pay for radio. It's no coincidence that Sirius and XM are priced within the ballpark of "all you can stream" monthly music subscription services like RealNetworks (NASDAQ:RNWK) Rhapsody and Best Buy's (NYSE:BBY) recently acquired Napster.

XM and Sirius have been thinking outside of the box, but how many people know that Sirius also offers up backseat video cartoons or that XM offers a customized traffic navigation service? Subscribers do pay extra for these offerings, but you don't see GPS champ Garmin (NASDAQ:GRMN) sweating XM's presence in this space or DirecTV (NYSE:DTV) complaining that toddlers can watch Nickelodeon in their cars.

Sirius needs to make a bigger splash, and SnooperPooper is right in suggesting that it doesn't have to be organic. Acquiring a company that has a sound non-satellite radio model but serious satrad implications would be a great way to dream up new growth catalysts that aren't all in the same basket.

So many choices
You're welcome to pick out your favorite suggestions. Some other ideas that I like but won't flesh out here include:

  • Soryinvestor believes that Sirius XM should smoke out a music label or distributor willing to pay for a channel to showcase its artists.
  • Petesgalaxy suggests hooking up with Microsoft (NASDAQ:MSFT) to create a Zune-based portable receiver.
  • Splintar thinks that a little guerilla marketing at the grassroots level would be much cheaper and ultimately more effective than costly advertising campaigns.

Clearly, the passion is there to save Sirius. The real challenge at this point is if Sirius XM can adapt its cost structure to succeed in the present as it carves out ways to grow in the future.

It's not an easy challenge to tackle, but Sirius XM Radio better hurry. It's on the clock.

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Longtime Fool contributor Rick Munarriz is such a fan of satellite radio that he subscribes to both Sirius and XM. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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