Your point is flawed though. Free is what they are competing with, its what they have to compete with and paid versions of things beat free versions all the time.
An interesting article I read recently. I share similar opinions.
http://mashable.com/2009/07/16/free-price/
Which is very similar to what I have said before when people were using the beer analogy... just because you offer it for free doesnt mean that people wont pay for either better beer or to drink it in a better atmosphere. Hence $2 for a beer at a local bar vs $6 beer at a boston nightclub vs $9 beer at a local strip club.
You guys should really think hard about your free vs. paid crutch. Sirius XM should create a product so compelling that people would rather pay for it then use a similar free service... just like they are doing to terrestrial.