Thursday, March 22, 2007

Suit against XM Expanded - New Labels Involved

March 22, 2007

According to Billboard.biz, new labels have decided to file suit against XM.

Publishers Sue XM Satellite Radio
March 22, 2007 - Legal and Management

By Susan Butler, N.Y.

A group of music publishers sued XM Satellite Radio over the XM + MP3 service late today (March 22). EMI Music Publishing, Warner/Chappell Music, Sony/ATV Music and Famous Music claim they want to "put an end to the pervasive and willful copyright infringement" of their compositions distributed over the service to "iPod-like devices controlled by XM."

"We've read that XM paid Oprah $55 million to develop content," says David Israelite, president/CEO of the National Music Publishers' Assn. "Yet they haven't paid one penny to creators of music for copies on these devices."

XM has argued in the past that it functions only as a radio broadcaster, licensing the compositions from performing rights organizations ASCAP, BMI and SESAC. "The lawsuit filed by the NMPA is a negotiating tactic to gain an advantage in our ongoing business discussions," says a spokesman for XM in a statement. "XM pays royalties to writers and composers who are also compensated by our device manufacturers. We are confident that the lawsuit is without merit and that we will prevail."

The publishers claim that the service does not merely broadcast recorded songs; it delivers perfect digital copies of songs for its customers to copy to the devices, create extensive libraries of the songs and replay them for as long as the listeners pay XM's monthly fee. Yet XM has not licensed the right to reproduce or distribute the recorded compositions, publishers claim.

The suit, filed in the federal District Court in New York, comes one month after a judge in the same court handed major labels a partial victory in their case against XM over the service. In January, federal District Court Judge Deborah Batts denied XM's attempt to dismiss the labels' lawsuit. The two suits could be consolidated so the same judge would preside over both claims.

Israelite says that negotiations began with president/CEO Hugh Panero over a year ago. "XM's final, best offer was far from adequate," says Israelite. He declined to provide specific details of the offer, citing a confidentiality agreement between the parties concerning details of the discussions.

Sirius Satellite Radio, part of the $13 billion proposed merger with XM, settled similar claims with labels over its Sirius S50 portable device last year. Israelite says that Sirius has not yet settled with publishers; he expects negotiations to start up again soon.

Named as plaintiffs in the suit are Famous, the Viacom-owned independent publisher, and 26 other publishers owned by EMI, Warner/Chappell or Sony/ TV. Although Universal Music Publishing Group and BMG Music Publishing are not named as plaintiffs, they are also part of the suit since it was filed by the NMPA on behalf of its members.

"In these types of cases, you find some representative plaintiffs," says Israelite. "This suit is really a fight for the entire publishing industry."

The publishers seek a maximum of $150,000 per infringement, listing in the complaint more than 200 songs as a "small fraction" of the compositions infringed. They include "Let It Be," "My Heart Will Go On," "Me and Bobby McGee" and "Like a Prayer."

"We don't want to hold back the technology, we don't want to prevent consumers' choice of how to acquire music," says Israelite. "But we must be sure that our creators are compensated properly when copies of their music are made."

Debra Wong Yang, former U.S. Attorney for Los Angeles and now a partner with
Gibson Dunn & Crutcher, is lead attorney in the case for the publishers.

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3/22/2007 07:33:00 PM

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