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The satellite radio firm agrees to compensate Universal Music for
recorded by customers. The accord may serve as a template.
By Charles Duhigg
LA Times Staff Writer

March 18, 2006

Sirius Satellite Radio Inc. and Universal Music Group said Friday that
had settled their dispute over a portable satellite receiver that can
make pristine copies of digital broadcasts.

The deal resolves a dispute over the Sirius S50 radio, which allows
to record as many as 50 hours of music and play individual songs.

The controversial device and similar products offered by Sirius
XM Satellite Radio Holdings Inc. had caused a rift between the
radio companies and the music industry.

The agreement may serve as a template for discussions between Sirius
other labels and between Universal Music and XM.

Sources said Sirius would pay Universal Music an undisclosed amount
would limit the number of S50 devices manufactured.

XM and, until recently, Sirius had argued that they should not have to
to let users record songs from radio transmissions. Music labels
that listeners should pay because saved tracks decrease demand for
purchased songs.

Music executives have pointed out that users of Apple Computer Inc.’s
iTunes must pay 99 cents a song, a significant portion of which goes
to the
music label. Labels receive only fractions of a cent for a song played
by a
satellite radio channel.

At an industry conference last month, Universal Music executive Larry
Kenswil called devices such as the S50 “cannibalization machines.”

Pressure to resolve the issue has been growing. The Recording Industry
Assn. of America has asked Congress to address the topic, and the
companies have refused to renew agreements giving XM and Sirius the
to air songs until limits on recording are established.

Sirius and XM have also been in negotiations with the National Music
Publishers’ Assn. over compensation for the composition rights of
delivered to satellite devices.

Universal, the nation’s largest music company, has been first to
agreements on other controversial digital issues. Last April, America
Online agreed to begin paying for access to Universal Music’s music
upending a previous custom that provided them for free.

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