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XM Marks The Legal Spot For RIAA

XM Radio's newest gadget is illegal and should be pulled from the market, according to a lawsuit filed Tuesday by the Recording Industry Association of America (RIAA).

The RIAA claims XM's compulsory license gives satellite radio companies only the right to publicly perform copyrighted works in a non-interactive, radio-like service.

The RIAA is seeking $150,000 in damages for every song recorded to XM's new device.

The Inno device, which is manufactured by Pioneer, allows subscribers to record up to 50 hours (approximately 1,000 tunes) of XM content for playback solely on the Inno device.

Music stored on the Inno can't be moved to other devices or uploaded to the Internet.

The Inno also allows XM subscribers to store MP3 files and bookmark XM content for later purchase through Napster.

XM's Inno
The Inno is RIAA's latest bugbear.
Source: Pioneer

"XM is playing a legal shell game by trying to morph a broadcast service into an ownership device," the RIAA said in a statement. "They are attempting to compete with an iTunes or Rhapsody model while bypassing the compensation made by those and other services to the music community."

The Washington, D.C.-based XM vowed to "vigorously" defend itself against the charges.

"These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades," XM said in the battle of dueling statements.

"The music labels are trying to stifle innovation, limit consumer choice and roll back consumers' rights to record content for their personal use."

XM claims the lawsuit is a negotiating tactic by the RIAA in XM's current contract talks with the music industry over licenses and fees. New York-based Sirius, the country's only other satellite radio service, has negotiated a deal with the RIAA and is not subject to the legal action.

"The service transforms XM's satellite transmission from a radio broadcast into a digital download service that provides subscribers with permanent copies of individual songs," the RIAA lawsuit states.

"More egregiously, the service allows subscribers to save downloaded files directly from digital play lists provided by XM -- without ever having to listen to XM's actual satellite radio programming."

To bolster its case that XM is attempting to offer a download service without paying royalties to copyright owners, the RIAA points to XM's advertising for the Inno, which states, "It's not a pod, it's the mothership."

The RIAA is also looking to Congress for help in its campaign against XM's new service.

In the Senate, Diane Feinstein (D-Calif.) has introduced the PERFORM Act (Platform Equality and Remedies for Rights Holders in Music) of 2006, with comparable legislation backed in the House by Howard Berman (D-Calif.) and Mary Bono (R-Calif.).

The PERFORM Act would force the use of protected formats for all streaming media services, whether online, on cable or through satellite radio and TV.

Several weeks ago, Universal Music attorney Michael Ostroff told a House panel, "Congress gave the satellite services a compulsory license to perform our music, so that their subscribers could listen to it," Ostroff said.

He added that the music industry helped launch satellite radio service by agreeing -- through the compulsory license -- to sell below market rates for XM music.

"Now XM wants to stretch and reinterpret the government-imposed license into a service that enables their subscribers to make permanent copies of our music," Ostroff said.