XM Faces Lawsuit Over Handheld Recording Device
The music recording industry has gone to court with its claim that it is owed higher royalties by XM Satellite Radio because of the company’s introduction of new handheld devices that allow listeners to record songs and create personalized playlists.
The lawsuit opens up a second front in the recording industry’s campaign for compensation from satellite radio firms that is on par with those paid by Internet-based music distribution services. A Senate bill designed to accomplish that goal was introduced April 26, and a companion bill was introduced in the House May 11.
A group of record companies, among them Virgin Records, Warner Brothers Records and BMG Music, filed a complaint in U.S. District Court in the Southern District of New York May 18, seeking $150,000 in damages for every song that can be recorded through XM’s Inno player.
The Inno allows users to record music from XM and other sources and manipulate the files to create personalized playlists. Music recorded on the Inno cannot be transferred to other recording devices, computer hard drives or uploaded to the Internet.
In a statement dated May 17 , the Recording Industry Association of America (RIAA) likened the Inno to a music distribution service such as Napster.
“XM is playing a legal shell game by trying to morph a broadcast service into an ownership device,” the RIAA said . “They are attempting to compete with an iTunes or Rhapsody model while bypassing the compensation made by those and other services to the music community.”
XM countered with a statement saying the devices are legal and provide a service that is no different than recording off of traditional broadcast radio, which is protected under U.S. law.
“The music labels are trying to stifle innovation, limit consumer choice and roll back consumers’ rights to record content for their personal use,” the statement said. “This is a negotiating tactic on the part of the labels to gain an advantage in our private business discussions.”
XM of Washington is just entering arbitration with the major record labels that will set its royalty rates for the next five years.
The lawsuit follows the introduction in the U.S. House of Representatives of a companion bill to Senate legislation that would require satellite radio companies like XM and competitor Sirius Satellite Radio of New York to pay royalty fees on par with cable and Internet-based music distribution services such as Napster and iTunes.
The House version of the Platform Equality and Remedies for Rights Holders in Music (PERFORM) Act of 2006 was introduced May 11 by Reps. Howard Berman (D-Calif.) and Mary Bono (R-Calif.). The legislation also would limit the capabilities of satellite radio listening devices.
