Today's WSJ (subscription required) front pages the latest dispute in the music industry: satellite radio. New receivers can record 750 songs and allow the owner to edit and organize them, a la iPod. In contrast, my oh-so-2005 XM MyFi records only 5 hours, and allows no editing.

The music industry takes the view that devices that perform downloading functions should pay royalties appropriate for that purpose, whereas the satellite companies want to keep paying the reduced fees that cover radio broadcasting.

As Adam Thierer points out, the best course would be to let these consenting adults negotiate in the market place, since there really is no "fair" price for music. But laws provide for rate-setting by the Copyright Office, with the next revision due next year, so we can expect a continuing string of stories triggered by both sides as part of the bargaining process.

Despite my addiction to satellite radio, I think the music industry has a strong point. Radio has always gotten reduced royalty obligations on the theory that people hear music and then buy it, so the medium serves as a promotional service for the industry. The WSJ says that the head of XM makes the point that his listeners buy more CDs than the average person, something that is certainly true if he has me in mind, but the argument applies only to a receiver, not to a hybrid receiver/recorder. If I can record rather than buy, I will.

As this site often notes, as technology changes, property rights must change to reflect the new balance, and sometimes this means property rights get shrunk a bit and sometimes it means they get expanded. The imperatives are always to deal justly with creators, to keep them laying the golden eggs, to maintain a system in which each consumer pays his or her fair share, and to minimize the incentives for consumers to try to game the system and get a free ride.

posted by James DeLong @ 1:49 PM | Radio

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