Sirius, Music Labels Cut Deal On S50

By Joseph Palenchar -- TWICE, 3/27/2006

New York — It looks like Sirius Satellite Radio avoided a lawsuit from at least three of the four largest music companies over continued sales of its S50 MP3 player, which stores time-shifted Sirius content.

Sirius said it reached a “satisfactory agreement” with Universal Music Group and “resolved issues” with Warner Music and Sony BMG.

For its part, EMI acknowledged that it is “in discussions related to the S50” with Sirius.

Sirius declined to comment on published reports that the music companies obtained royalties on the sale of each S50 and obtained limits on S50 production.

In a statement, Sirius said it and UMG Recordings “have entered into a satisfactory agreement with respect to the S50 and are in productive business discussions regarding the distribution of future products.”

As for Warner and Sony BMG, Sirius would only say that “we've resolved issues related to the S50.”

The S50 and similar models planned by XM Satellite Radio were publicly described by Universal Music Group executive Larry Kenswil as “cannibal machines.” The president of Universal's eLabs new technology division described the devices as “a great example of not caring if you lose a dollar as long as I make a penny.”

The products let consumers store time-shifted satellite-delivered music for later recall by title, artist, or genre, and they were designed “to increase satellite subscriptions at the complete expense of the ability to sell music,” Kenswil charged.