Sirius and XM are in the midst of mediation with the Copyright Royalty Board. The current deal in which Sirius and XM pay a percentage of revenue has expired, and the parties could not come to agreement on how royalties would be handled going forward.

This situation is being closely watched by many, as there are many issues that need to be considered now that simply did not exist less than 10 years ago. For the purpose of this mediation, Sirius and XM are negotiating on one singular front.

The current rate, and estimated by many is between 4.5% and 7% of revenue. In the first round of negotiations Sirius and XM proposed a figure of less than 1% (0.89%), while the CRB was seeking a tiered system starting at 8% and capping off at 23% over time. Obviously the two groups were not seeing eye to eye, and thus the mediation.

In the latest proposal, Sirius and XM turned the debate on it’s ear by proposing a flat rate per performance of $1.20. This number would rise over time as subscriber targets are met, and the audience is larger.

What Sirius and XM have on their side is that they are seeking a solution that ties to the music, and not all revenue. Why should CRB get a portion of revenue derived from the NFL, MLB, Howard Stern, or Oprah? In point of fact they shouldn’t. The safety net for Sirius and XM is that they can control their royalty expenditures by either airing songs or not airing songs. The more they play, the more they pay…the less they play, the less they pay.

So what does this $1.20 per performance boil down to? Well, if we assume 15 songs per hour played on 65 channels, 24 hours per day, and 365 days per year we arrive at $10,249,200 per year from Sirius as well as XM. It is not the unique songs that come into play, but rater any performance of a song.

Reasonable thinking tells you that it is perfectly fine to get paid on an artists performance, but not so right to get paid on the work of someone else such as a talk show host. This new methodology seems far more logical, no matter what the “per performance” rate ends up being. Artists and performers get paid for their work only, and not the work of other non musical talent. Good music will be played, and the reward comes in the form of a check each time a song is played.

There are protections for each party in place with this type of proposal. As the subscriber base grows (the audience), the amount per performance grows. If music is not cutting it, Sirius and XM can trim back. The key is that they are paying for what they are using.

Position - Long Sirius, Long XM

In news that will be welcomed by many, the RIAA has suffered a setback in it’s pursuit of individuals that nay or may not be involved in file sharing. The decision has the potential to be devastating for the RIAA, which until now has used its financial muscle to build a string of victories over ordinary citizens in courts.

The RIAA tactic has been to make the legal process so expensive that individuals become compelled to settle out of court. The strategy is that people become very nervous of downloading anything for fear of being named in a law suit.

Tanya Anderson was one such person that became entangled in the RIAA’s legal tactics, but she fought back, and took the fight to its furthest point, thereby making it public knowledge that she emerged victorious. More often than not, cases settled out of court carry specific stipulations regarding any disclosure. This ensures that, for the most part, and RIAA loss will not make headlines.

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With the suspension of Opie & Anthony, an organization called People Against Censorship (PAC), was founded by Debbie Wolf. The organization quickly garnered a huge membership (reportedly 12,000 members) from loyal fans to Opie & Anthony.

Censorship is a sensitive issue, and no one wants outright censorship to become commonplace in America. We as a nation pride ourselves on free speech.

Now, to be clear, I have always had an opinion relative to the Opie & Anthony broadcast in question, as well as the actions of fans of the duo. I will outline my opinion, and then address some new developing stories.

1. I feel that what transpired on the broadcast in question did step over a line. The broadcast was not censored at all, and in fact aired in its entirety.

2. I feel that the apology was in order, and that it should have been recognized that there are cases where things go to far. The issue at hand here is often compared to comedy routines, etc. The problem of course is that the Opie & Anthony show is a blend of comedy, edgy material, current events, etc. When listening to a comedian, the listener does not have to adjust to the tenor of the show, it is simply comedy.

3. I feel that Opie & Anthony mocking/belittling the apology was not only a slap at those initially impacted, but a slap to XM as well. It was their commentary on this the apology that got them suspended. Again, no censorship transpired. Their comments were aired in their entirety.

4. Those that feel that Opie & Anthony were marketed as uncensored simply had a misconception about what the real situation was. Rest assured, that Opie & Anthony were not going to pull another “the mayor died in a car accident” stunt, or a session of “love making at St. Patrick’s Cathedral” event. There were indeed lines, and fans who listen to the show with any regularity should have understood this.

5. I felt that fans rallying around a rape and violence against women scene to defend free speech and stand up against censorship was an extremely poor choice. Whether they like it or not, mainstream America sees this suspension as tying back to rape and violence against women.

Now, here is the test of PAC and Debbie Wolf. Over the past week, there has been an issue brewing with Bubba The Love Sponge. The events in question were not even part of a Sirius show, but rather a personally run website of bubba called Bubba Raw. Bubba Raw has no connection whatsoever with Sirius, and is a subscription service which sports wild stunts, and adult themed material.

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A pair of men from Alabama has filed a Class Action lawsuit against XM satellite Radio in response to the service outage suffered earlier this month.

The suit states that they as consumers, and on behalf of the class pre-pay for XM Satellite Radio service, and that XM failed to deliver service. In the suit, the pair from Alabama quotes various aspects of the consumer agreement of XM, but for some strange reason missed an entire section regarding disputes…

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Sirius Satellite Radio is a hot product and an easy target for potential thieves. It’s hard to walk down the street now a days without seeing a Satellite Radio unit just sitting in plain sight on the dash or stuck to a windshield. For thieves trying to make a quick buck this is like taking candy from a baby, they can be in and out in 5 seconds.

The problem for the victims is that when police officers like Thomas Shea from JustStolen.net recover the stolen units and contact Sirius for help, they run into a wall. Officer Shea says that he deals directly with a lot of big name manufactures in an effort to try and track down the rightful owners of stolen goods and Sirius is by far the hardest to deal with. When the Shea identifies himself as a Boston police officer and presents Sirius with the ID numbers on the radios, they refuse to be of any help to him.

The real kicker is that if the units are not found Sirius has no problem reactivating the stolen radios. It is time that Sirius changes its tune and puts a stop to essentially condoning the theft of their radios and make a public statement alerting all potential thieves that stolen radios will not be reactivated and their efforts will go unrewarded

It is not clear why Sirius takes this stance but, one could argue that this is some kind of internal business decision. If Sirius does nothing about the stolen units they can be reactivated and the original victim has to buy a new unit. This winds up producing two new sales for Sirius whereas, if they put a block on the stolen unit, they would only wind up with one new purchase of a receiver. By taking no stance on what is a serious issue they stand to put more money in their own pockets.

If you know someone in the Boston area that has had their Sirius radio stolen, there are currently 5 receivers in police custody. Let’s do what Sirius doesn’t want to do and reunite these victims with their property. Just head over to JustStolen.net and type the word “Sirius” into the search by category field to see the current list of recovered products.

There were some interesting tidbits that came out of the Congressional hearing held Feb 28, over the proposed Sirius XM merger, none of which were more interesting than the comments made by current Sirius Chief Executive Mel Karmazin. When asked about what would stop him from raising prices, Karmazin responded by saying, not only will the new company not raise its monthly price from $12.95, it very well could lower it!

Mel wants to make it clear to those at the House hearings that he would be willing to agree to pricing restrictions to prove that the proposed merger of the two satellite giants would do nothing but help consumers.

This is good news for those penny pinching fans out there but, I don’t think this comes as any surprise. Mel has always said that raising the cost for 10% of radio listeners is not smart business and that Sirius is more concerned with converting the other 90% of listeners who have not yet made the change. It should also be noted that if the merger is approved, the new company will have far less overhead, a savings that can easily be passed along to consumers.

It looks like the first step for the successful merging of both Sirius and XM satellite radio will be held before a new Congressional antitrust task force February 28th.

Before the “merger of equals” can happen it will have to be approved by the U.S. Justice Department and Federal Communications Commission who must review mergers for their influence on reasonable competition.

There is a lot of speculation on whether or not this merger will be approved because of its monopolistic characteristics even though it does not seem that way to me. I would have to argue that the proposed merger would create a company that will have to compete with the likes of terrestrial and internet radio. The radio industry as a whole has changed in such a way that there are now many different outlets and satellite radio is just one of them. It is in the radio industry that the healthy competition lays and that should be enough to lead to the successful merger.

Via [Reuters]

XM Satellite Radio and SIRIUS Satellite Radio have made the long awaited announcement that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals. The newly formed company will have an estimated value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

Sirius will be offering a 20% premium to XM shareholders with 4.6 shares of its common stock for each share of XM they own. In the end both of the companies current shareholders will hold a 50% share in the new venture.

All though the two sides have agreed on the merger there is still quite a bit of red tape that a lot of analysts are concerned about. The largest of which might just be regulatory review and approvals from antitrust agencies and that not a big a fan, the FCC. If all of these approvals pan out the companies expect the transaction to be completed by the end of 2007.

The U.S Senate is aiming to be a thorn in the side of this fledgling industry by trying to create some new law that will prohibit the ability to record music off of satellite radio. The proposal says that all satellite radio providers would be required to implement “reasonably available and economically reasonable” copy protection technology aimed at preventing “music theft” and restricting recording.

This is sure to be an issue for Sirius with their popular new recording capable device the Stiletto 100. It will be unfortunate if Sirius is forced to comply but, one would hope that users will still be able to record things like talk shows and the news. Surely subscribers would still be able to record Sirius original programming so, at least all is not lost.