It’s okay for record labels to go ahead and sue XM Satellite Radio to stop it storing songs that are distributed via its radio channels, said a US judge this week.
XM had taken the legal moves of the record labels head on and called for their actions to be swept aside, claiming that US consumers have a right to record music they hear on the radio under the Home Recording Act of 1992.
This war is really about just how much XM has to pay for the privilege of allowing its customers to turn their satellite radios into MP3 players which store songs they like when they hear them.
Back in May, when this started, we took the view that the record labels were really using the legal action is a ‘negotiating tactic’ for a bigger license fee. Rival Sirius makes no secret of the fact that it has agreed rights from the Recording Industry Association of America to allow its customers to download and store, but not transfer songs, from its own satellite radio service.
The obvious corollary to this is that if another satellite radio company (that means XM in the US) does NOT have such an agreement along with the extra fees, then the RIAA is duty bound to take legal action to either get them to pay the same, or to stop them allowing their content to be stored.
If it turns out that what XM is doing is not at all illegal, then whatever Sirius has paid the labels, will have been unnecessary.
US law on this point is far from clear and XM has always maintained that what it is doing is entirely legal. Now a court has said that the case can go ahead, and a full argument can be heard in Court. XM says it will continue to fight the actions with the RIAA, and is not yet ready to enter a negotiating room over increased fees.
The big difference here is that in order to seed the market for satellite radios with a national footprint, both XM and Sirius have had to bring the devices themselves to market, specifying them and finding manufacturers for them. This is not the case for the local radio station, and all they have to do is send out music on the airwaves. As such the RIAA sees that the creation of devices that take copies of their members’ music is a way of making profit from that copying.
There are also moves afoot in Congress to clarify this law, driven by the powerful RIAA lobby, that will mean mandating content protection technologies and changes to copyright laws to ensure that increased licenses need to be paid where a radio station encourages storage of music.
Both Sirius and XM have been involved in speculation, stimulated by comments from their leading executives to consider a merger, and although the FCC has been initially cold to the idea, it remains a distinct long term possibility and last week Faultline argued it is inevitable. The higher charges needing to be paid for allowing the recording of radio delivered music is just one more reason why the two will find it more economic to merge rather than compete.