An addendum to Patrick's post on last Friday's program on The Role of Music Licensing in a Digital Age. Several times, the comment was made that royalties are paid under the Audio Home Recording Act on the new XM Inno, which has 45 hours of total recording capacity, and a capability to create playlists.

AHRA royalties are set at 2% of the wholesale price. The Inno retails for $399.99, so the royalties are probably about $4.

The XM MyFi, which appears to have the same functionality as the Inno EXCEPT that its recording is limited to 5 hours and you cannot create playlists, sells for $180, a cut of $220 from the Inno.

So it would appear that the content creators are collecting less than 2% of the value that consumers place on the ability to store and replay at will the broadcast content. Since no one buys a radio to listen to static, this does not same like a fair division. Nor is it a division that the market would reach - it is a case of Congress creating compulsory licenses and then allocating property rights according to relative political strength.

posted by James DeLong @ 12:33 PM | Radio

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