My colleague Rick Munarriz recently laid out the case for buying Sirius XM Radio. Among his reasons is that terrestrial radio companies like Entercom (NYSE: ETM) and Radio One (Nasdaq: ROIAK) have seen revenue increase during the first quarter of 2010.
Rob Pegoraro is a technology columnist at The Washington Post.I recently interviewed him on our Motley Fool Money radio show and asked him about the future of satellite radio.
Chris Hill: A few months ago I interviewed your colleague Frank Ahrens, business columnist extraordinaire at The Washington Post, and I want to get your reaction to something he said. We were talking about Sirius XM (Nasdaq: SIRI) and he said that he thought that in three years Sirius XM will be gone. You're the technology columnist. What do you think?
Rob Pegoraro: I think we're heading that way. I had this revelation last year. I went to a tech conference and it was about music and technology and there was a panel about web radio and the guy from Pandora, a very good radio site, said, "We are getting so much traffic on mobile devices." I came home and the next weekend my wife and I were visiting some friends who have a vacation house in the Shenandoah Valley in Virginia. I thought "Well let me take one of these phones we are reviewing. We will see how long we can listen to web radio."
We listened to it all the way down [Route] 66, Interstate 81, pretty much all the way to this little cabin in the woods. I thought "We have been listening to web radio the whole time. It didn't cost us anything. No contract. Only required a phone we already bought."
What is the use case for Sirius XM in there? I don't know. There are sort of two ways you can compete with web radio. You can be cheaper; that's kind of hard. You can have more variety. Also kind of hard when you use satellites with fixed bandwidth, or you can be more local --- difficult to do when you use satellites that have to cover the entire country.
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