Satellite radio threat

Apple and other online music companies along with music labels are , according to The Wall Street Journal: "The beleaguered music industry faces a new, unexpected threat in its battle to protect copyrights and royalties: the arrival in stores of new satellite-radio receivers that mimic iPods in their ability to store and organize hundreds of songs. Fast-growing subscription radio services, offered by XM Satellite and Sirius provide hundreds of channels of music and talk radio to people who buy special radios and pay a $13 monthly subscription fee. Some satellite-radio receivers already allow listeners to record a few hours of programming." Their growing popularity also threatens the iPod-iTunes ecosystem. [subscription required]

The report notes that the new receivers enable users to store much more music from satellite-radio broadcasts as well as manage songs using playlists threatening music labels' more lucrative per-song purchase model and cutting into digital music services' share of the digital download pie. While the iPod has dominated the portable player scene, the variety and extent of satellite programming may be alluring to consumers.

"Because both services offer niche channels, it becomes easy for users to quickly find artists or songs they want and store them. Sirius, for instance, offers channels such as Rolling Stones Radio and Elvis Radio," according to the report.

The WSJ notes that the industry garners much lower royalty rates for songs that are played on satellite radio than it does for songs that are purchased through download services or on CDs. Satellite radio royalty fees are also lower that the charges for songs that play on subscription services, such as Napster.

While the industry, including the big 5 music labels, argue that the new devices are essentially recorders that allow consumers to keep songs permanently without paying the appropriate fees, the services are much like digital subscriptions services run by Napster, Yahoo!, and others: users must keep subscribing to the satellite services to be able to access their recorded songs.

by MacNN Staff