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Satellite Radio: The Latest Threat to Music Labels
Subscription-based radio services, made popular by XM Satellite Radio and Sirius Satellite Radio, offer hundreds of channels of music and talk radio to consumers who pay a $13 monthly fee and purchase a special satellite-radio receiver. Now these receivers are allowing listeners to record hours of programming. Some are calling it “…an iPod that pulls down the satellite signal.”
These two satellite-radio companies have expiring agreements with music labels granting them rights to play music on the radio. They pay substantially less in royalties than music stores or download services. Negotiations must take place next year but both sides have their own idea of how the new agreements should be formed. In short, the satellite-radio companies want the same agreement (or better) and the music labels want much more, of course.
The two satellite-radio services combined have nearly 10 million paying subscribers, more than double the number last year. The companies argue that music labels should stop complaining and start thanking. A representative from Sirius said, “We provide a powerful promotional platform that drives the sales of music for artists, in particular, for many artists ignored by traditional radio.” Others are deferring to a 1992 federal law, which allows consumers to make recordings from the radio arguing that this ability is a “legal time-shifting device” much like TiVo.
While that may be the case, Sirius’s new $330 S50 (satellite-radio receiver) can store around 750 songs and includes an easy way to edit and organize songs and/or recorded programming. Users can easily find music by artist or title. XM has their own device being released early next year, which will have similar features including an option for users to move playlists from their computer to the satellite-radio receiver.
The music industry is claiming that these new devices are blurring the lines between radios and digital music players. It’s no secret that the industry is notoriously unprepared when new technology hits the market. Piracy often increases while industry executives struggle with the notion of embracing shifting consumer behavior due to technology.
Negotiations are scheduled for next year and will help shape the future of digital music. We’ll see what happens. For an introduction to digital music players, please see this article. For an introduction to music download services, please see this article.