Music Labels Sue XM Over Recording Device

By Annys Shin
Washington Post Staff Writer
Wednesday, May 17, 2006

The recording industry is suing XM Satellite Radio Holdings Inc. for copyright infringement over a new portable radio that offers iPod-like features.

The lawsuit, filed yesterday in New York, is the latest escalation in a battle between major record labels and satellite radio providers over whether the satellite companies should pay more for giving subscribers the ability to compile music libraries.

To stay competitive with Apple's iPod and similar products, XM and Sirius Satellite Radio Inc. recently introduced radios with recording features. XM's Inno and Sirius's S50 allow subscribers to record as much as 50 hours of broadcast music, or search for songs by particular artists.

XM and Sirius pay the labels for the right to broadcast music and have argued that the right to record music for personal use is included under that.

Yesterday, however, a coalition of record labels alleged that XM's Inno device amounts to a "new digital download subscription service" not covered by existing agreements.

Sirius worked out deals last month with key record labels over its S50 device, according to Recording Industry Association of America chairman and chief executive Mitch Bainwol, and was not named in yesterday's lawsuit.

District-based XM has more than 6 million subscribers. Sirius has more than 3 million. Both charge their customers $12.95 a month for more than 120 channels of music, news, entertainment, and talk radio.

XM officials said they would fight what they regard as a recording industry effort to narrow the definition of "fair use" -- the same doctrine that allows television viewers to record a show for personal use, or for past generations of radio listeners to make cassette tapes of favorite tunes.

"These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades. The music labels are trying to stifle innovation, limit consumer choice and roll back consumers' rights to record content for their personal use," XM spokesman Chance Patterson said yesterday in a written statement. "XM will vigorously defend this lawsuit on behalf of consumers."

Recorded material can't be transferred from the Inno or S50 to other devices, as can be done with other digital recording technology.

The music industry officials contend the recording capability of Sirius's S50 and XM's Inno goes beyond existing agreements and requires a separate license and fee.

The industry is also lobbying Congress to change copyright laws more broadly to ensure that artists and labels are paid the same when their work is distributed across different platforms.

By offering more than the traditional passive listening experience, the Inno is "radio morphing into recording devices," Bainwol said.

The issue is not about giving subscribers the ability to record songs for personal use, Bainwol said. Rather, he argued that XM's technology is similar to iTunes and other online music download services.

As technologies converge and begin offering many of the same features, there should be parity in how artists are compensated, Bainwol said.

The lawsuit comes as XM and major record labels are in talks over broadcast fees. Patterson called the lawsuit "a negotiating tactic on the part of the labels to gain an advantage in our private business discussions."

Bainwol said the lawsuit was not related to the broadcast fee talks.

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