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Problem Finding, Department of

There have been so many books and things about problem-solving that we figure most problems are already solved. So we need more problems to keep all those expert problem solvers busy.

Tuesday, January 04, 2005


The War of the Satellites

Ken Rutkowski asked whether satellite radio can be a profitable business, noting that the revenues for Sirius are well below what is needed to cover its debt service. Here is what I think:

Several questions here. First, can the two major players in this field survive the competition with each other? One possible outcome is given by the Gingham Dog and the Calico Cat:

Second, of special interest to stockholders: Can either player survive without bankruptcy? If Sirius is overburdened by that debt service, it can use bankruptcy to solve the problem. Various airlines will assure that companies can survive bankruptcy.

Third, is their future business in satellite transmission or content? In two years people may be saying that the main assets Sirius has are contracts with people like Howard Sterns. Even now, Sirius offers online streaming services to its subscribers. It could morph into an online aggregator of marketable content, with satellite service as an incidental adjunct.

Fourth, what are the competing transmission alternatives? Right now, I can download valuable content and move it to a Creative player that straps on my arm. I can drive to the gym, jog, workout, and eat lunch while listening to KenRadio, Adam Curry, WebTalk guys, and great presentations by David Kaye at IT Conversations. And if I want more, I can check Ipodder.org.

And these programs will play when I want to hear them. They will pause when I want to talk to someone. They will replay when I can't remember something Ken said. This sounds a lot like TiVo for radio.

But what about future alternatives for transmission? Even now, there are lots of places where my PDA could access a Wi-Fi net and run a podcast aggregator. How long will it be before the transmission costs on a mobile phone are cheaper than the cost of satellite transmission? How will WiMax fit into the picture?

I think there is more room for smart content aggregators than for satellite transmission. The three major online broadcasters (AOL, Yahoo, MSN Radio) already have 4 million listeners. I think the future will be the battle of the aggregators, not the war of the satellites.

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