I've always thought that paying for radio was a faintly ridiculous notion, but Steve Gilliard has a very eloquent two part series (part one & part two) which suggests that like paying for HBO or cable TV, pay radio is an idea whose time has come.
The trigger for this, of course, is the departure of Howard Stern from terrestrial radio:
Let's get the bullshit out of the way: Stern isn't going to Sirius to say fuck, but to talk like an adult. One of their channels, Raw Dog Radio, has been playing tributes to Richard Pryor, sans bleeps. What is clear from listening to Sirius is that the lack of fear of the FCC is only one factor. The other is the utter corruption of programming on terrestial radio.
Every few years is another payola scandal, with some artist getting a push from the record company with a little blow attached. FCC rules which block many songs from airtime, uneven rules which punish Stern and not Oprah.
In short, you have a terrestial radio world which has alienated listeners for years, for any number of reasons, starting with increasingly restricted playlists. Wanna know why you have to tolerate Jessica Simpson, that's why. As MTV moved towards reality programming, videos got shunted up to the 100's on digital cable on MTV2, and music was merely the atmosphere behind the shows. MTV Cribs, Pimp My Ride, Viva La Bam, uses the rap/rock lifestyle to discuss anything but...
Stern, in many ways, was the last of the old breed of DJ who had a radio show and did it, stamping his own personality on it . People focused on the sex antics, but that was a small part of the show. Much more time is spent on the news, Howard and the cast's lives and calls than naked women. But unlike Limbaugh and O'Reilly, Stern isn't a bully, smashing down people who disagree with him and lying for sport...
Stern is to sattelite radio what HBO was to cable in the 1980's. We forget that HBO came before basic cable. You wouldn't be watching Alton Brown without HBO.
Why? Because HBO proved people would pay for TV.
Steve also diagnoses the problems of terrestrial radio. The key graf of the second article, though, is this gem.
Even without the FCC, the audience was moving away from radio because of those playlists and the lack of music. Because of the FCC restrictions, a lot of acts could not get airplay. Those demands, as much as anything else, drove the MP3 into the mainstream. Then it created internet radio. But the problem with internet radio is that it doesn't allow for easy movement away from the computer. But it proved that new radio formats, some incredibly specialized, could not only be created, but draw an audience. Radio spent more time killing low power radio than worrying about the power of the internet.
If Steve is right (and there's a fair amount of evidence suggesting that he is), terrestrial radio is in the position the TV networks were before HBO and cable TV exploded and chewed their "guaranteed" 32 share of the ratings down to the point where a 6 share is enough for a show like Lost to be a huge hit.