XM pressured to pay for digital recordings

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XM Satellite Radio Inc. should have to provide fair compensation to music's copyright holders -- recording artists and labels -- when its subscribers record and store songs on the D.C. company's portable devices, new bipartisan legislation says.

But Gary Parsons, chairman of XM's board of directors, told lawmakers yesterday that satellite radio companies already pay millions of dollars in performance royalties and millions more are shared among music industry stakeholders from the sales of digital recording devices as required by law.

The devices that let XM subscribers store up to 50 hours of programming are no different from taped radio recordings made by listeners, he added.

"It's no different distribution than the distribution that has gone on for 50 years," Mr. Parsons told a Senate Judiciary Committee hearing.

The Platform Equality and Remedies for Rights Holders in Music Act of 2006 (Perform Act), introduced by Sens. Dianne Feinstein, California Democrat, and Lindsey Graham, South Carolina Republican, would require satellite, cable and Internet broadcasters to pay fair market value for the performance of digital music. The act would ensure music copyright holders are compensated fairly as satellite radio services become distribution channels via portable devices.

Edgar Bronfman Jr., Warner Music Group chairman and chief executive officer, endorsed the legislation, accusing XM of "trying very hard to have it both ways" and Mr. Parsons of being "very disingenuous" when he said he would pay more for exclusive rights to artists' songs, which the music industry cannot do based on compulsory licenses under copyright laws.

Mr. Bronfman compared XM's portable devices to Apple Computer Inc.'s IPods, which require users to pay for each downloaded song.

Terrestrial radio stations are not required to pay royalties to artists or music labels for over-the-air transmissions, unlike satellite and Internet providers.

Victoria Shaw, a composer and musician from Nashville, Tenn., said she and other artists were being robbed of their livelihoods, and noted that Mr. Parsons repeatedly used the word "play" in his testimony instead of "download."

Mr. Parsons said the legislation "would impose a new tax" on the company and its subscribers. He added that XM's devices comply with the Audio Home Recording Act, which requires manufacturers to pay royalties on the sales of devices that digitally record music.

"I'm not an artist or a label. I'm a songwriter getting something stolen from me," said Ms. Shaw, whose songs have been recorded by Garth Brooks and others.

Unlike XM, Sirius Satellite Radio has reached agreements with each of the major record companies for its receiver that allows customers to record content, said a spokesman for the New York company. XM has more than 6.5 million subscribers compared with more than 4 million for Sirius, all of whom pay about $13 per month for service.

At the conclusion of the hearing, Judiciary Committee Chairman Sen. Arlen Specter, Pennsylvania Republican, invited the panelists back for an informal round-table discussion and urged them to find a compromise rather than leaving it to Congress to resolve.