Marketplace Report: RIAA Sues XM Satellite Radio

The recording industry filed suit against XM Satellite Radio on Wednesday for what it calls "massive wholesale infringement" of copyrights. The action targets XM's hand-held digital audio device, which allows customers to download up to 50 hours of music. Officials for the Recording Industry Association of America (RIAA) say they want fair compensation.

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MADELEINE BRAND, host:

Back now with DAY TO DAY, I'm Madeleine Brand.

The recording industry is once again in a tizzy over music downloads. This time, it's suing XM Satellite Radio over a device that lets users tape music from the satellite service to listen to later. MARKETPLACE'S Tess Vigeland is here, and Tess, first of all, tell us about this device. What is it?

TESS VIGELAND reporting:

Well, it's called an Inno, and it's somewhat like an I-Pod. It's similar size, similar appearance, costs about $400. And it's basically a portable satellite radio device with an MP3 player built in. And if you're an XM subscriber, you can download--if that's what you call it--from the satellite service onto this device a baseball game or a talk show or, of course, in this case, music. You basically punch a button on this thing while you're listening to the service, and it records the song that you're listening to from beginning to end. And it also does function as a normal MP3 player. You can go to Napster and buy songs and load them onto this device.

BRAND: So is the recording industry upset because people aren't paying them for that music?

VIGELAND: That's exactly it. This is another accusation of copyright infringement. In fact, the language in the lawsuit calls it massive wholesale infringement. And the argument is that this device turns radio signals into an illegal downloading service. Of course, people have been making recordings off the radio for decades, but the record labels contend that this is different. And I asked Staci Kramer of paidContent.org to help explain.

Ms. STACI KRAMER (Representative, paidContent.org): XM believes it has a strong point because the music to record isn't available on demand. They say it should be treated like a VCR, not like an I-Pod. I can't go to XM and say, I want to hear only this musician. On the other hand, you can still set up an alert that tells you every time a musician is on, and because of the way you can record, you could create a sort of quasi-on demand experience.

VIGELAND: And, of course, music and musicians on demand is what you get with any paid, legal download service like iTunes or Napster. What you can't do on the Inno, at least not yet, not legally, is transfer the music from it onto some other medium like a CD or your computer and share it.

BRAND: Mm hmm. And what does the recording industry want XM to do, just stop and cease and desist?

VIGELAND: Well, the lawsuit is seeking $150,000 in damages for each and every song that XM's customers download onto these devices. That's a lot of potential money. Again, not sure whether it's quite accurate to call it a download, I guess that's part of what they would settle in court. But unlike some of the other actions that the recording industry has taken against people who record off the Internet, this doesn't go after XM's customers, just the company.

XM says this lawsuit is just a ploy by the record labels to get it to pay licenses like iTunes has to. But XM's competitor, by the way, Sirius Satellite Radio, has already agreed to pay those license fees for a similar device.

And later today on MARKETPLACE, we're looking at hospitals that decided one way to get healthier is by going green.

BRAND: Thank you, Tess. Tess Vigeland of Public Radio's daily business show, MARKETPLACE. It's produced by American Public Media.

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