May 17, 2006
XM Sued by Record Labels Over "Downloads"
XM Satellite is being sued by the big four labels over its "Inno." The hand held device allows subscribers to record broadcasts for later playback. The record companies are miffed because they see no revenue from this arrangement, claiming that this is the same as iTunes. XM counters that pay-for download services allow browsing and selection on demand. For XM, they provide the same capability that radio listeners have had for years, albeit digitally. One function that analog recording has traditionally not provided is breaking a recording into songs and identifying them by artist. Perhaps that is closer to a download service after all.
The labels are seeking $150,000 in damages per song copied by listeners. There are no suits against customers. XM says that the suit is a ploy to leverage negotiations between the company and the recording industry. Sirius, XM's competitor, did a license agreement for a similar device. The context suggests that this suit will end in settlement. Hanging in the balance, of course, is the status of fair use rights for radio listeners (hint: the RIAA will likely take the position that there aren't any in the digital world) and the business model for radio. Now the model looks like blanket licensing by corporations to provide some rights to and on behalf of their subscribers in third party music is going to be the way to go. As for fair use, congress doesn't seem to be in the mood to strike a balance for listeners as they tend not to have an effective lobby.
Speaking of lobbying efforts, check out this page from the Center for Public Integrity to see what broadcast companies contribute to which candidates and politicians. The radio/tv industry alone gave $9.18 million to members of the government last year alone. That's a lot of lunch money for members of congress and elected executive candidates who do the "people's" work.
ABC News has the story on the suit. Other news services are carrying variations on the story.
May 17, 2006 | Permalink
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