Text 11817, 83 rader
Skriven 2006-06-27 19:42:22 av /m (1:379/45)
Ärende: Copyrights And Wrongs
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From: /m <mike@barkto.com>


http://www.businessweek.com/magazine/content/06_27/b3991023.htm

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The record biz could lose by winning its lawsuit over XM's recorder

I'm a fan of Bob Dylan's new Theme Time Radio Hour show on XM Satellite Radio
(XMSR ), but I'm often not around at the times it is aired. So the idea that
Pioneer's brand-new inno portable receiver can record XM broadcasts seemed
perfect. But there's a problem. The recording industry doesn't want consumers
to be able to buy an inno -- or anything like it.

A group of record companies, backed by the Recording Industry Association of
America (RIAA), has filed a suit in federal court in New York claiming the
inno's recording ability violates copyright law. The complaint seeks a ban on
the sale plus damages -- as high as $150,000 for every song XM plays.

Unlike the music industry's fight against file sharing, this dispute has
nothing to do with piracy. The inno, which we'll look at in detail in a future
column, can store music recorded from XM. But once saved, the songs are locked
in the device until they are deleted or the XM subscription lapses, when they
vanish. And XM is paying about 7% of its gross revenues in music royalties. In
other words, XM pays for broadcast rights and would-be pirates are thwarted.

THE CONSTITUTION AUTHORIZES COPYRIGHTS specifically "to promote the progress of
science and useful arts." But the record companies, like the movie studios, are
using copyright laws to try to protect their business models from innovative
but disruptive technologies. This hurts us all.

The XM suit is complicated. (Surprise.) The basic claim is that the royalties
XM pays allow it to provide an "evanescent satellite radio broadcast," but
because the inno can record, XM effectively becomes a download service. XM has
not formally responded to the suit, but Chance Patterson, vice-president for
corporate affairs, calls it "baseless and without merit." The suit claims that
the inno would discourage subscribers from paying for legitimate downloads.
Wrong, says Patterson. The inno lets users tag songs they want to buy, he
notes, and when they connect it to a PC, the tagged songs are automatically
marked for purchase at Napster. (NAPS ) Complete the purchase, and the songs
download to the inno as MP3s.

Like all such lawsuits, this one's about money; the record companies want to
extract more of it from XM and competitor Sirius Satellite Radio (SIRI ). The
latter avoided a lawsuit by signing a license with three major record companies
to pay extra royalties for its recording-capable S50 player. XM refused to roll
over. But the XM case is also part of the futile effort by entertainment
companies to control how customers use their products. More than 20 years ago
the Supreme Court ruled it was permissible for consumers to tape television
shows for personal viewing at a later time. The entertainment companies have
been trying to win back ground ever since.

The studios say recording is allowed only if customers listen to the tracks
exactly as XM sends them out. "The [XM] service is not designed for the purpose
of permitting the user to listen to the program at a more convenient time...,"
the suit argues. "[But the inno] is designed to free subscribers from ever
having to experience XM's transmissions as a unified, integrated radio
broadcast."

I am not a lawyer, and I have no idea what the judge will do in this case. But
I think this is one battle the record companies could lose by winning. The
entertainment industry has grudgingly yielded ground in efforts to control how
customers use its products. The TV networks have gone furthest toward giving up
their established business model by letting customers watch selected shows
where and when they want. Rather than emulating the movie studios, which are
trying to defend their control over the times and places that films are
available in different forms, the record companies should follow TV's lead and
give customers what they want.

Changing a successful business model is painful. But businesses that fight the
tide of consumers who want to push new technology to the max are likely to end
up drowned.



For past columns and online-only reviews, go to Technology & You at
businessweek.com/go/techmaven/
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 /m

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