Music publishers sue XM Radio
CHICAGO - A group of music publishers has filed a lawsuit against XM Satellite Radio Inc., alleging that the company is infringing on copyrights through radios that allow consumers to record songs they hear on XM's service.
The suit was filed Thursday afternoon in a federal court in New York by the National Music Publishers' Association.
Plaintiffs are Viacom Inc.'s Famous Music; Warner/Chappell, owned by Warner Music Group; Sony/ATV, owned by Sony and singer Michael Jackson; and the music publishing entities of EMI.
XM shares closed unchanged at $13.49.
Such portable players as XM's Pioneer Inno and Samsung Helix allow users to record songs, create playlists. The NMPA alleges that giving people the ability to make these permanent digital copies means that XM is operating an "unauthorized digital download service" to compete with Apple's iPod.
The NMPA is demanding a maximum of $150,000 in statutory damages for each song it claims to have been infringed by XM. It lists more than 175 songs as a "small fraction" of those it says XM is illegally distributing.
A lawsuit was the NMPA's "last resort" after negotiations over royalty fees broke down, commented the group's president, David Israelite, in a statement. "We want new technologies to succeed, but it can't be at the expense of the creators of music. All that we ask is that music publishers and songwriters be fairly compensated for their efforts," he added.
XM spokesman Chance Patterson replied in an e-mailed statement: "The lawsuit filed by the NMPA is a negotiating tactic to gain an advantage in our ongoing business discussions. XM pays royalties to writers and composers who are also compensated by our device manufacturers. We are confident that the lawsuit is without merit and that we will prevail."
Thursday's suit follows a similar lawsuit filed against XM in 2006 by the Recording Industry Association of America. Earlier this year, a federal judge ruled that the RIAA suit could proceed, rejecting XM's argument that its subscribers' rights to record music are protected by the Audio Home Recording Act of 1992.
Music publishers represented by the NMPA also called into question part of XM's rationale for its proposed acquisition by rival Sirius Satellite Radio Inc.. The $13.6 billion deal has inspired hearings on Capitol Hill.
Noting that XM has argued that it is a radio broadcaster, not a seller of music, the NMPA accused the company of changing its tune now that the traditional radio industry has argued against the XM-Sirius merger.
"XM has (now) asserted that it is in the same market as `music subscription services, iPods, CD players and cell phones,' making clear that its unlicensed service is designed to compete with legitimate digital music download services and other distributors of recorded music," the NMPA said in a statement.
"XM is not a download service," XM's Patterson responded. "The new XM radios allow consumers to save a song off the radio for their personal use - a right consumers have had for decades."