If you think that this column will constitute a public bashing of Sirius XM Radio (NASDAQ:SIRI), you're absolutely right. Then again, I'm also writing about the five reasons for investors not to worry about the satellite-radio heavyweight today. But for now, let's set optimism aside and discuss why you should start fretting.

1. Subscribers, come back
By now, everyone knows that Sirius XM's user base peaked last year, with sequential declines in each of this year's first two quarters.

I'm going to throw some numbers at you. See if you can guess what they are:

  • 2006: 3.2 million
  • 2007: 4.4 million
  • 2008: 6.1 million

Net subscriber additions? You wish. Howard Stern fans who have migrated to satellite radio? Not quite. We're looking at the number of combined Sirius and XM subscribers who cancelled their service.

As great as satellite radio may be, 6.1 million accounts -- more than a third of its base at the start of 2008 -- deactivated. Some listeners can't pay. Some simply won't.

The trend is only getting worse, with 3.3 million cancellations through the first six months of 2009. Sirius bulls may dream of covering the continent with activated receivers, but the harsh reality is that 17 million subscribers have walked away over the past 3 1/2 years.

2. Conversions are slipping
High churn isn't a model killer, as long as a company can add gross subscribers cheaply. Sirius XM has managed to lower its subscriber acquisition costs, but it can't seem to accelerate the signups.

I'll spare you the guessing game this time. Here are the gross subscriber additions for the combined company:

  • 2006 : 7.7 million
  • 2007: 8.1 million
  • 2008: 7.7 million

Stack up the cancellations against the gross additions, and you will realize that the subscriber count may have peaked in 2008, but subscriber growth levels peaked in 2006, long before the recession hit so many other leisure industries.

As for the actual gross additions, they're eerily consistent for what is presumably a growth industry. In reality, several factors are smoothing out the numbers. Retail additions -- the Sirius and XM fans who go out and physically buy a receiver, instead of settling for factory-installed units -- have been shrinking. Sirius XM has been ramping up the number of new-model cars that come equipped with satellite radio receivers (from 32% of cars built for sale in the United States in 2007 to 45% in 2008), but the conversion rates are slipping.

Over the past year, the percentage of new car buyers who choose to pay for Sirius or XM service after their free trials expire has shrunk from 50.6% to 44.4%.

Now, a company can overcome both growing cancellation rates and shrinking conversion rates if it can compensate with volume. Alas, satellite radio may no longer be the future of radio. Through the first half of 2009, Sirius XM landed just 2.7 million gross subscribers. The automotive market's meltdown is a major contributor, but even when folks are buying new cars, they're not as excited about satellite radio as they used to be.

3. Better mousetraps are always coming
Satellite radio has positioned itself as an alternative to terrestrial radio. In that respect, it's like LeBron James playing one-on-one against Dakota Fanning. AM and FM radio stations are shackled, ad-laden, and limited.

However, there's a reason why the net retail subscriber base at Sirius XM peaked in 2007 -- a year before the overall sub count petered out: There are too many aural alternatives outside of the car. Who wants to pay $15 a month for a home-docked satellite radio solution, when Internet radio offers deeper dives into genres and programming?

Isn't it just a matter of time before the Pandora-zation of cars arrives?

We're nearly there already. Apple (NASDAQ:AAPL), Research In Motion (NASDAQ:RIMM), and Palm (NASDAQ:PALM) are tacking on millions of new smartphone owners with unlimited data plans. Web-based radio has gone portable.

Verizon (NYSE:VZ), Sprint Nextel (NYSE:S), and now MobileOne have also gone from pitching mobile broadband cards to promoting the Novatel Wireless (NASDAQ:NVTL) MiFi mobile hotspot. Instead of a USB card that hooks up a single laptop, the MiFi creates a portable Wi-Fi bubble that remotely provides online connectivity for up to five devices.

Smartphones and mobile hotspots aren't cheap, but we're also talking about the tens of millions of users who'd make for ideal Sirius XM subscribers.

4. The Howard Stern Burn
No matter what you may think of the randy free-thinker, his impact on satellite radio is undeniable. He transformed Sirius Satellite Radio from underdog to top dog in the eventual Sirius-XM merger.

However, Stern's five-year contract is up at the end of next year. Some will argue that he will never return to terrestrial radio, where he entertained a larger but less lucrative audience.

I agree, but why is that the only option? Stern isn't getting any younger, and he has certainly amassed the wealth to retire now while he can still enjoy it. He can also strike out on his own. It's telling that Stern's contract didn't make his two Sirius channels available on Apple's App Store platform. Technology has evolved to the point where he can launch his own premium Internet radio offering.

Either way, there are probably millions of people who were swayed to Sirius as a result of Stern's arrival. Will they stick around if he bolts at the end of 2010?

5. The roads less traveled
Are we driving less?

If you spent less time in front of your television, axing your cable or satellite television bill would be an easy call. The same thing can happen behind the wheel, with Sirius XM's lifeblood at stake.

There are fewer trends out there hotter than auto sharing. Zipcar is the pioneering leader, growing at a 30% clip and offering cars by the hour through 8,500 businesses and 120 college campuses.

Folks who share a car -- Zipcar notably offers an eco-friendly, high-tech system where iPhones reserve and unlock gassed-up cars -- save an average of $600 a month. Car sharers learn to drive less, giving the movement green appeal.

Zipcar's success has its imitators, as Hertz, U-Haul, and grant-backed non-profits rev up in this nascent market. Even if bulls suggest that satellite radio subscriptions make sense in shared cars -- as they do in the car rental space -- we're still talking about reducing the number of cars on the road, and with them, the potential pool of Sirius XM subscribers.

Several aspects of Sirius XM's model have already peaked:

  • The sheer number of net subscriber additions topped out in 2006.
  • Retail subscriber totals maxed out in 2007.
  • Overall subscribers hit a peak in 2008.

Are you still comfortable in Sirius XM as a growth industry? Before you answer, check out the five reasons not to worry about Sirius XM.

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.