In a move that should shock absolutely no one, the Recording Industry Association of America has filed a lawsuit against XM radio. The issue: XM's new breed of satellite radio receiver/mp3 player, the Pioneer Inno and Samsung Helix. When the first reviews of the Pioneer Inno hit the blogosphere I wondered what concessions XM would have to make to the feature set of the receiver to get it approved by the RIAA. The answer: none. They rolled the dice and put the Inno on the shelves as is.

Well, this could wind up costing XM a pretty penny. When Sirius came out with the first receiver/mp3 player combo, the S50, the RIAA meddled with the product before it hit the shelves. Months later, Sirius cut a deal with the RIAA where they would pay royalties on songs downloaded to the device. XM decided not to nip the problem in the bud.

There are two key points here. Number one: this lawsuit, and the strong-arm tactics of the RIAA are equally repugnant. Subscribers pay for satellite radio, they aren't stealing anything. The DRM attached to downloaded songs from both Sirius and XM prohibits sharing of files and burning onto CDs. Beyond that, if the RIAA is successful in classifying XM and Sirius as download services so what? Their monthly fees are in line with Napster's unlimited download program's monthly fee.

Number two: XM is on thin ice here. If it fights lawsuit and wins, a precedent is set. This will undoubtedly help Sirius, who is planning to roll out a new portable receiver this summer. If it fights the lawsuit and loses, it's going to lose ground in the hotly contested battle for satellite radio. It's shares already dipped in after-hours trading last night. The smartest move is probably to settle. While it never sits well when you succumb to bully tactics, you'd think they might have seen the writing on the wall when Sirius cut its deal. The fact of the matter is that the RIAA holds the upper hand, it won't hurt the studios at all if XM doesn't have music to play. — Brian Ward

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Technorati tags: satellite radio, sirius, xm, riaa.