Recording of Radio Wigs Out Industry

Correspondent Josh sent me this link to a story about the nervousness created in the music industry. This supports what I was saying the other day, that the genesis of XM lawyering up against Time Trax was in the RIAA and not XM itself. For example, check out this passage:

MFan.com’s manager, Tim Morris, said XM officials had canceled his order this month for more PCRs. He said he’d been inundated with requests from interested buyers.

“If we had 5,000 in the last two days we could have sold all of them,” he said.

Morris said the company told him that it would not be distributing PCRs to him or anyone else.

The Associated Press left telephone messages and sent e-mail to several spokesmen for Washington-based XM Radio but got no immediate response.

Scott MacLean, founder of Toronto-based NeroSoft.com, which distributes the $29.95 TimeTrax, said he received a notice from XM’s lawyers to stop selling it but, after consulting with his own attorneys, decided not to heed the request.

He’s made between $7,000-$8,000 from sales of the software since he began distributing it Aug. 13.

“I have had many people say they actually bought XM because of this application,” said MacLean, 35.

MacLean said all his software does is simply record music off the analog XM signal.

“It’s exactly the same as running it off a cassette recorder,” he said. MacLean speculated that XM was pressured by the recording industry.

So, that’s one individual retailer who said he could have sold another 5,000 copies of the PCR card if XM would have let him have them. At $10 per month, that’s $50,000 per month in subscriptions that XM won’t be getting, $6M per year and that’s just from that one guy. What they are really cracking down on there is the bridge between XM Radio and the iPod platform and had it been played right (and without the highly probable pressure from the RIAA) that could have been parlayed into many more subscriptions for XM.

The other thing is that if all TimeTrax is doing is recording an analog signal out to disk, it sure seems like his lawyers are giving him the correct advice. This is just another mechanism for fair-use recording just as if I was running the RCA outs of my XM radio into my computer. It doesn’t even have the “but it is digital and the signal doesn’t degrade, thus we must clamp down” rationale of most RIAA arguments. This just smells fishier and fishier as it goes along.