Sat Radio, Record Industry Could Clash
The increasingly litigious record industry could be ready to take on the burgeoning satellite radio market next over what it sees as potential copyright infringement by XM and Sirius.
Press reports indicate that the RIAA is upset over recording capabilities being built into the newest portable players from the two services. XM has offered its MyFi player with such capabilities since last year, and Sirius plans to bring out a similar player by the holiday season. The Sirius model relies solely on recorded programming to operate.
RIAA representatives argue that these devices will harm sales of legal downloads; however, it should be mentioned that the quality of the recordings made by these devices are noticeably lower than songs sold on iTunes and other music stores.
Record labels have taken an aggressive stance against piracy and copyright infringement, most recently suing 64 more people who downloaded music over the high-speed Internet2 network, along with another 693 people downloading from P2P services.
Analysts say that the matter could end up in court to be settled if the RIAA and the satellite radio companies cannot work out their differences.
"Based on recent talks with execs at record labels and the Recording Industry Association of America (RIAA), we see potential spats ahead. RIAA may file a lawsuit this fall to stop a new feature for upcoming wearable satellite radios," Barton Crockett, an analyst for JP Morgan, recently wrote in a report on the industry.
While XM and Sirius did not return requests for comment, XM in previous comments to the press indicated that it believes the situation could be settled in the best interest of all sides, including the consumer.
But the two groups could further clash over royalty fees when they meet to renegotiate contracts. According to Crockett's report, the RIAA's asking price for the new five-year contract to start in 2007 is over $1 billion, significantly higher than the current $80 million contract that expires next year.