XM's middle name must be Sue. The National Music Publishers Association is initiating a federal court lawsuit against XM Satellite Radio
The radios in question allow XM subscribers to record songs, in their entirety, and store them on their receiver. Even though XM claims that its subscribers can't transfer the tracks to other devices or burn CD copies, the music industry publishers feel entitled to a piece of the action, as if an actual digital download were purchased.
XM has sparred with the music industry before. Songwriters, artists, and record labels have felt that XM's music royalties aren't generous enough. When one of your top selling points is access to more than 70 digital music channels, most of them commercial-free, you don't really want to upset the music makers. Yes, you don't want to be at their money-grubbing mercy either, but rival Sirius
Besides, is the music really that big of a selling point? Sirius has fewer music channels, yet it has been able to land more net new subscribers than XM for five consecutive quarters. Many of these receivers are also the portable aftermarket kind, and XM has struggled at the retail level.
It's too late for XM to turn back now, though. Music has been the cornerstone of content distribution deals through DirecTV
Harmony is always an option. One would think that XM's pending merger with Sirius, leaving radio-friendly Sirius CEO Mel Karmazin at the helm, would be a good thing for the industry. Unfortunately, that combination still has an uphill battle to climb before winning regulatory approval.
So, for now, it's another lawsuit on XM's plate. And the song remains the same.
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Longtime Fool contributor Rick Munarriz is a Sirius and XM subscriber. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
