Record Labels V. XM: An Issue of Quality?

12Jun06

A suit has been filed recently against XM radio from four record labels. Take some time to read up on it here, here, here, and here. I had a discussion with one of my hallmates last night trying to understand why the labels would do such a thing. I don’t think he had any real support for his position, and I may not do it a wealth of credit here, but I think it’s something worth discussing.

My friend, let’s call him Steve, said that the big issue that concerned the record labels was one of quality. The logic is as follows… Sure you can record music off the radio, but that quality sucks, so it’s ok. Digital recordings from a satellite provider are digital and thus by their nature have all the quality that digital can offer. So the record labels must want compensation for that, right?

As a bit of background, Steve is far from unfamiliar with technology. He has a modded Xbox, already owns an Xbox 360, downloads music, has a hacked phone, etc, etc. What worries me is that Steve’s logic makes sense on a very intuitive level, especially to those not familiar with the case and the bigger picture of the recording industry as it stands today. I believe this intuitive yet faulty argument, for one, presumes that we’ve always been able to record radio, ignoring the battle nearly identical to the one today that took place when tape recorders hit the scene, allowing people to record songs off the radio. Tapes were being sold at the same time in music stores, with a noticeable, but not too distinct difference from radio recordings. So the quality argument has to be insignificant. In fact, the devices in question are far more safe for the recording industry than the old tape recorder, because the recorded songs cannot be transferred away from the mp3 player, unlike tapes which at the time could be plugged into home stereos, kept in the car, or given to your girl/boyfriend.

My argument was that this lawsuit is basically the tape recorder argument all over again. Except, since the labels lost on the tape front, they’ve shifted focus to the digital front. The claim is that XM has turned into a more mobile iTunes, because the consumer ends up with mp3s on their portable device regardless which service they use. These files kept on the device can be replayed at will and are certainly no longer part of radio broadcasting. So they must have been distributed to users, an act which requires double the licensing fees XM already pays (which are actually the highest of any company thus far).

I have to disagree with the recording industry in this case. I favor XM in large part because I own an XM receiver. It’s nice being able to have greater choice of what to listen to and not having to change the channel on long road trips from home to school and back again (4 hours each way). As a customer, I’ve also experienced the difficulties, and they’re all identical to radio. Sometimes the signal is bad, and sometimes there’s just nothing worth listening to at the moment. With XM established as radio, it should follow that recordings of its’ broadcasts should be protected under fair use.

Now don’t get me wrong. I don’t see anything immoral or inhuman in the labels’ actions. They are entitled to seek profit like all other businesses. Sure it gets sticky when intellectual property is involved and lawsuits allow companies to demand outrageous fines in damages (with sums that equal twice the labels’ gross revenue), but everyone’s entitled to try and get their piece of the pie.

That said, there are a number of practices the record labels have been employing which I don’t like. I don’t like claiming more than twice in damages than your company generates in revenue. I don’t like pressing on with lawsuits against people who don’t know how to use a computer, or who would have to drop out of school to pay the fines. I don’t like raising the price of music over the years as the production costs have continued to go down, and then acting stunned as a grey and black markets emerge to cover the market you’ve shut out. I don’t like claiming that the artists need to be fairly compensated when they see as little as 7% of revenue from music sales (7% specifically from iTunes). I don’t like that because of the increasing expenses of courtroom battles, big companies can use monopolistic power and resources to outpay every challenger (or at scare most of them away).

When it’s all said and done I worry though, because if people don’t understand the larger issue of the recording industry trying to scrape for every dollar (deserved or not), and instead think that there’s some semblance of credibility in their actions because of a discrepancy in quality, then the outcome would be based on dishonest and inaccurate foundations. I simply don’t believe that that’s how business should be done.

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