Universal Music (UMG) and XM Satellite Radio have finally settled their 2006 legal spat over the XM device which allowed customers to store up to 50 hours of radio. We always said that this was really about using the courts as a negotiating tactic and rival Sirius, shortly to merge, financial regulator permitting, with XM, already has such a deal.
Universal wanted a little more money, and knowing its recent habit, that would be a percentage of the purchase price of the device, in order to allow the music to be stored on the device. It’s not too surprising that the two did not disclose terms of the deal.
The legal action was brought in May 2006, and it was not by UMG, but by the entire Recording Industry Association of America (RIAA). But whatever agreement it may or may not have reached with the RIAA, UMG has been aggressive in its new approach of wanting a percentage of the device sale, a practice it achieved first when Microsoft agreed to pay it part of the purchase price of the new Zune.
Unlike traditional radios, in order to seed the market for satellite radios, XM and Sirius had to bring their own devices to market, specifying them and finding manufacturers for them. So they have control over the manufacture.
UMG has now withdrawn from the complaint filed by the record companies against XM, but it looks like a further settlement will have to be entered into to make the remaining major labels happy.