Satellite Radio as Disruptive Technology

Today, radio personality Howard Stern announced that he will move his top-rated morning show to Sirius satellite radio in January 2006. Citing censorship pressures stemming from the Janet Jackson breast-baring incident during this year's Super Bowl, and the $550,000 fine that CBS received for it last week, Stern said "it's time to go" and called satellite radio "the next big thing."

Stern had been threatening to leave the airwaves long before the Janet Jackson incident, so this shouldn't come as a total shock to his fans. He has claimed that he is being harassed not only because of the post-Jackson crackdown, but because of his outspoken opposition to George W. Bush. Plus, it might also have something to do with the recent move of the rival "Opie and Anthony" show to XM Satellite Radio. Because satellite radio is currently unregulated and free from sponsor pressures, both the Stern and the O&A shows will likely become raunchier than ever. In also opens the door for an even more outrageous up-and-comer to out-Stern Stern (perhaps yet another reason why he made the move).

Needless to say, stock in Sirius is way up today, while shares of Viacom, parent company of Infinity Broadcasting, Stern's current employer, are off.

Because of his legion of die-hard fans, Howard Stern has unique power in the radio industry. Many fans will subscribe to Sirius just to hear Howard every morning.

So is this the event that will cause satellite radio to "cross the chasm" from an emerging technology to the mainstream? If it isn't, I don't know what will be. Satellite radio is affordable (though not anywhere as cheap as traditional radio), a wider arrays of receivers are available for listening, and the subscription format allows a "safe harbor" for more creative freedom. In the future, XM and Sirius could become for radio what HBO has become for TV -- the breeding ground for sophisticated, cutting-edge innovation. Meanwhile, traditional radio will remain popular, though as a more "vanilla" format. The asendance of satellite radio will also be one more stike against traditional broadcast advertising.

Satellite radio is also an example of how information continues to become more granular and targeted. Thirty years ago, a community might have a couple of television channels and several radio stations that served "everyone." Today, there are millions of websites for every interest, cable and satellite TV channels that serve niche audiences, DTV systems that let us pinpoint the exact programs we want to watch... and now, satellite radio programs for every taste. San Francisco Chronicle columnist Joan Ryan has an interesting take on how this fragmentation is affecting our political discourse.

The one thing that could derail satellite radio would be a drive by Congress to regulate content. Because satellite radio doesn't use the "public airwaves," traditional FCC regulation could be difficult. But in today's regulatory environment, all bets are off. Politicians know that they can get a lot of mileage out of "anti-smut" campaigns, and no politician can oppose such measures without being tagged "anti-family."