Like emperor penguins making their annual migration to their mating grounds, Howard Stern fans are beginning their trek toward Sirius Satellite Radio (NASDAQ:SIRI). This morning the company announced that the company now had three million subscribers.

If you need to put that number in context, consider that back in January Sirius was expecting just 2.5 million listeners by the end of 2005. It's not the first time that the company has lapped its public targets. In July 2004 the company told investors that it was on track to hit a million subscribers by the end of 2004 and wound up with just more than 1.1 million members.

The logical explanation would be that Sirius is stealing away satellite radio fans from larger rival XM (NASDAQ:XMSR), but that isn't the case either. Back in February, XM was expecting to close out the year with 5.5 million subscribers. After landing 1.8 million new members through the first nine months of 2005, XM raised its target to six million subscribers. XM has also found itself upping its outlook several times during the previous years.

So what's going on here? Where did these nine million listeners come from? Well, we know where they're coming from. That only leaves us with a new set of questions to tackle. Is terrestrial radio really that bad? Is SatRad really that good?

With AM and FM bands available for free in most cars and a dirt-cheap conventional radio being all that's necessary everywhere else, a large chunk of the audio content-loving public has decided that it would rather spend $50 to $250 on a satellite radio receiver and pay either XM or Sirius $12.95 a month for their slate of digital radio content.

It's not as though Clear Channel (NYSE:CCU), Cumulus Media (NASDAQ:CMLS), or Viacom's (NYSE:VIA) Infinity Broadcasting are going down without a fight. Terrestrial radio is battling back by trying to speed up the rollout of digital "high-definition" broadcast standards.

Still, it's not going to be easy. Conventional broadcasters don't have the subscription revenue to help subsidize commercial-free music. That's been a big selling point for XM and Sirius subscribers, who flock to each provider's roughly 70 different dedicated music channels after tiring of chatty disc jockeys and long commercial breaks between songs. The AM and FM world is also in a pickle when it comes to retaining its top talent. Even the juiciest of syndication contracts can't match the $500 million five-year deal that Sirius brokered with Stern. As more of the conventional radio stars see their contracts come up for renewal, do you think they'll stick around when the XM and Sirius national markets are that much larger and their syndicated reach that much smaller?

Yes, XM and Sirius may have landed nine million of the most ardent radio fans, but this is really just the beginning. Two months ago, XM was recommended to subscribers of the Rule Breakers ultimate growth newsletter service. If you can't feel the satellite radio revolution rumbling beneath your feet, start reading this again from the first paragraph. If you can't justify the seemingly rich valuations that XM and Sirius presently command, do yourself a favor and envision where satellite radio will be in five, 10, and 15 years until you grasp the potential of the medium, the captive audience, and the pricing flexibility of two very powerful companies.

Longtime Fool contributor Rick Munarriz is a Sirius subscriber, but he doesn't own shares in any of the companies mentioned in this story. T he Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.