Why Should XM Have To Pay The Record Labels In Order To Innovate?

from the a-waste dept

Mon, Dec 17th 2007 11:16pm — Mike Masnick

In a bit of unfortunate news, it appears that XM has given in and decided to settle its dispute with the record labels. The company has already settled with Universal Music, with the other major labels expected to quickly follow suit. The Reuters article incorrectly states that this was a patent infringement suit (fact checking, anyone?) but it's actually a copyright issue, where the record labels were using copyright to try to prevent XM from innovating. Specifically, XM has a license so it can play music from the record labels and it fairly pays all the royalties required. The problem, though, was that XM decided to introduce a new device, the Inno, that allowed XM subscribers to record songs and listen to them later. That's a perfectly legitimate use -- and the courts have backed up the fact that "time shifting" by recording programs is perfectly legal. Not so, according to the RIAA, who suddenly felt that because people could record the music from XM, XM now had to pay another licensing fee on top of the licensing fee it already paid. This went directly against what the RIAA had said earlier, when it promised that it would never use copyright laws to prevent new technologies like the VCR, TiVo or the iPod. The Inno clearly fits in as a device just like that... and yet, here was the RIAA demanding extra money to allow such a device to exist. It's really too bad that XM wouldn't continue this fight in court, as it's clearly on the right side -- but with its economic troubles and the impending merger with Sirius, it looks like the company decided it was easier to just pay off Doug Morris and his cronies to leave it alone. Chalk another short-term victory up for Morris, who continues to do everything possible to win in the short-term at the expense of the long-term.

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Filed Under: innovation, recording industry, riaa, royalties
Companies: riaa, universal music, xm

15 Comments

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moe, 18 Dec 2007 @ 12:32am

Merger means two for the price of one?
If the gov't gets moving and actually approves the merger (as they should), does this mean Sirius won't have to go through either a lawsuit or a similar deal since XM already paid up?

I'm not sure if Sirius has been sued (or already settled) yet, but I believe they have similar devices to the Inno.
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Mike (profile), 18 Dec 2007 @ 12:44am

Re: Merger means two for the price of one?
I'm not sure if Sirius has been sued (or already settled) yet, but I believe they have similar devices to the Inno.

Sirius does have a similar device, but it paid up a while ago, before anyone sued.
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Anonymous Coward, 18 Dec 2007 @ 1:33am

On the bright side, the deal apparently covers all future devices. So, they can make and sell as many as they want without having to deal with the RIAA again.

Actually, because of this news, I'm considering buying an XM device. I was unaware before that there were any available with recording capabilities.
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PaulT (profile), 18 Dec 2007 @ 4:23am

Re:
"On the bright side, the deal apparently covers all future devices. So, they can make and sell as many as they want without having to deal with the RIAA again."

That's not really a bright side. It doesn't help with any future innovations, it just means that this particular innovation (time-shifted radio) won't be the subject of a lawsuit again with XM. It neither helps any future competitors with similar devices, nor any future features they might wish to add. If XM decided to add the capability to beam the recorded radio files to another device in their next model, for instance, you can bet they'd be sued again.
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Gunnar, 18 Dec 2007 @ 4:36am

The deal does cover all future devices, but the deal requires XM to pay on a per device basis. A high price to pay for never having to deal with the RIAA again.
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David, 18 Dec 2007 @ 5:12am

Time shift?
I'm not sure of the details of the suit, but isn't time shifting the ability to rewind and pause live radio? The Inno does not have this function. It can record and play back. The functionality is so crippled I've found the $200 device to be pretty much useless. I can set up recordings for shows that are scheduled late at night, but I can't get them off the radio. I may as well just use my computer to record shows.
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Anonymous Coward, 18 Dec 2007 @ 5:48am

Time shifting is just a new name for what a VCR has done for a long time.
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Anonymous Coward, 18 Dec 2007 @ 6:05am

@Mike When you say "Sirius paid up" what you actually mean is they crumbled to the riaa demands without so much as a wimper! At least XM gets some props for fighting the riaa cartel. Of course it all goes out the window when you have to "merge" with a stronger company and thus are powerless to fight the principled fight
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Ron (profile), 18 Dec 2007 @ 6:19am

It's Time
I realize there may be some political correctness going on, but, it's well past time that the RIAA and other similar organizations be referred to as what they really are: organized crime; "companies" run by thieves and extortionists.
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Don't Do It, 18 Dec 2007 @ 6:47am

Re:
Before you buy any XM device, Google "XM Sucks" and see what people have to say. I am one of them and I'm no deadbeat. I paid for a subscription with a one time credit card number, and even though I chose not to renew my subscription, they attempted to charge my now expired card number. When it failed, they turned my account over to a collection agency called CCA, based in Mass.

That's all there is to the story - nothing more. I didn't owe anything, there was no auto renewing clause in my agreement or any gotchas.

I called and spent too long on the phone with them and nothing was resolved. Their customer service sucks, their billing sucks and they can't go out of business fast enough for me.
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Kevin, 18 Dec 2007 @ 7:14am

Dont Do It?
Googling 'XM Sucks' Will obviously only find you messages and articles about XM Sucking. How about you google XM Awesome and see what you come up with?

What's the point of researching a topic on the Internet if you already have your mind made up and aren't even going to look for another opinion other than one that validates your own?
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Carme, 18 Dec 2007 @ 10:58am

The RIAA was actually pretty smart
It is indeed a win in the short term, but not at the "expense" of anything. Innovation is not held back, the device is marketed as planned, it's just that the RIAA found a way to make an additional profit from it. It made a smart move by identifying XM was at a fragile state and jumped the opportunity to shake them down for some money. Let's give the RIAA the benefit of the doubt that it would have backed away as soon as XM started fighting back, because it was clearly in a legally losing position.
The RIAA simply found an opportunity and took it, at no obvious loss - the device is out. The problem is the legal regime that enabled this shake down in the first place, not the RIAA acting on it.
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Lokinar (profile), 18 Dec 2007 @ 3:17pm

What??
They're going after people who make devices to "store" songs... Hmm.. how about going after Sony, Maxell, TDK, and memorex for selling 60 minute tapes as well.. They allow you to record from the airwaves as well.

If you're going to get serious, lets get F&$&ing serious...

~loki
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teknosapien, 18 Dec 2007 @ 6:03pm

remeber the sur tax
on record able media We all had to pay a premium to purchase tapes and CD's should this be covered under that ?
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Damien, 18 Dec 2007 @ 7:20pm

"The RIAA simply found an opportunity and took it, at no obvious loss - the device is out. The problem is the legal regime that enabled this shake down in the first place, not the RIAA acting on it."
So if the law says I'm allowed to beat old ladies and take their money that makes it right? When you help write a law designed to roadblock legally sanctioned fair-use rights and then go out of your way to abuse that same law you can bet your a** you're the problem.
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