Why RIAA is Silent on XM-Sirius

The enemy of my enemy is my friend — sometimes.

When XM and Sirius Satellite Radio announced their proposed merger two weeks ago, the first to oppose the union was the National Association of Broadcasters. If satellite radio didn’t compete with terrestrial radio, this merger would be a lot more troubling – and a lot less bothersome to NAB.

NAB’s motive is transparent: it always seeks to harm XM and Sirius. Broadcasters have done that for 10 years, and they’re doing it still. Yet the two satellite companies have lured more than 13 million into paying nearly $13 a month for the news, talk and music they used to get for free.

The one lobbying group that might have something useful to say about this merger is the Recording Industry Association of America. Having had their own high-profile battles with the satellite companies, RIAA is the “enemy of the enemy,” if you will. But RIAA has decided to keep quiet. Why the silence? Read on.

The recording industry, whether performing artists or “suits,” is not exactly a friend of the broadcasters. For more than a generation, musicians and disc jockeys have been arguing over who should be paying whom for airplay. The power of the NAB is the alleged reason why the United States, along among industrial nations, does not recognize a copyright in the public performance of songs played over AM and FM radio.

RIAA has its reasons for remaining neutral. On the one hand, said its president Cary Sherman, satellite royalties could be lower without two competitors in the marketplace. On the other hand, Sherman said, the recording industry is pleased that XM and Sirius tout the Apple iPod as competition. That’s what the RIAA has been arguing in their copyright lawsuit against XM Satellite Radio. At last week’s House Judiciary Committee hearings, they were conspicuous by their absence.

A small matrix would help lay readers sort through this copyright thicket. Music copyrights protect at least two things: the sound recording and the underlying musical composition. The other dimension concerns whether the copyright covers reproduction or public performance:


With reproduction royalties three orders of magnitude higher than the performance rights, the recording industry has an interest in reclassifying a “performance” in Quadrant 2 as a “reproduction” or a “distribution” subject to the Quadrant 1 rates. That’s what RIAA companies are trying to do against XM Satellite Radio.

But at least satellite radio already pays the performance right in Quadrants 2 and 4! They’ve had to, under the 1995 law for digital transmissions. Broadcasters and their analog transmissions were exempted from Quadrant 2.

It’s also clear that a lot of outstretched hands complicate any legal music business. Internet music companies like America Online, Apple and Yahoo! pay for a public performance right to webcast, or stream, Internet radio. They still have to worry about music publishers arguing for a cut. And when they pay the big bucks to RIAA and Harry Fox for “download” services, the American Society of Composers, Artists and Performers in turn demands a percentage of revenue on the grounds that a download is also a performance. Last week the Digital Media Association, the techies’ trade group, filed a legal brief rejecting that view.

In spite of attempts at double-dipping, copyright experts say that the line between these quadrants is thin. “On the Internet, there is no difference between a stream and a download – the only difference is whether the bucket is emptied after the play occurs,” says Fred von Lohmann, senior intellectual property attorney for the Electronic Frontier Foundation.

Von Lohmann opposes RIAA’s lawsuit against XM – which is also part of a legislative push by the recording industry – because it cramps the freedom of device manufacturers to implement time-shifting technologies. He’s also opposes the recording industry’s attempt to lay the groundwork for eventually collecting sound recording revenue from the big radio broadcasters. There is no evidence a performance right is necessary to stimulate music creation, says Von Lohmann.

Not all copyright skeptics agree. Consider the perspective of Public Knowledge Executive Director Gigi Sohn, a critic of both the NAB and the RIAA. With so many other ways to get music and audio content, Sohn said at last week’s Judiciary Committee hearing, she wasn’t unduly concerned about monopoly power by an XM-Sirius combination. On the contrary, her concern was that the merger might be grounds for imposing a PERFORM Act mandate.

But if NAB is the enemy, and if RIAA is the NAB’s enemy, Sohn did manage to find some friendly ground with the recording industry. NAB’s exemption makes no sense, said Sohn: like webcasters and like satellite radio, NAB should also pay for a performance right.

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