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Sirius to Pay for Copies by Users

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Times Staff Writer

Sirius Satellite Radio Inc. and Universal Music Group said Friday that they had settled their dispute over a portable satellite receiver that can also make pristine copies of digital broadcasts.

The deal resolves a dispute over the Sirius S50 radio, which allows users to record as many as 50 hours of music and play individual songs.

The controversial device and similar products offered by Sirius competitor XM Satellite Radio Holdings Inc. had caused a rift between the satellite radio companies and the music industry.

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The agreement may serve as a template for discussions between Sirius and other labels and between Universal Music and XM.

Sources said Sirius would pay Universal Music an undisclosed amount and would limit the number of S50 devices manufactured.

XM and, until recently, Sirius had argued that they should not have to pay to let users record songs from radio transmissions. Music labels countered that listeners should pay because saved tracks decrease demand for purchased songs.

Music executives have pointed out that users of Apple Computer Inc.’s iTunes must pay 99 cents a song, a significant portion of which goes to the music label. Labels receive only fractions of a cent for a song played by a satellite radio channel.

At an industry conference last month, Universal Music executive Larry Kenswil called devices such as the S50 “cannibalization machines.”

Pressure to resolve the issue has been growing. The Recording Industry Assn. of America has asked Congress to address the topic, and the music companies have refused to renew agreements giving XM and Sirius the rights to air songs until limits on recording are established.

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Sirius and XM have also been in negotiations with the National Music Publishers’ Assn. over compensation for the composition rights of songs delivered to satellite devices.

Universal, the nation’s largest music company, has been first to establish agreements on other controversial digital issues. Last April, America Online agreed to begin paying for access to Universal Music’s music videos, upending a previous custom that provided them for free.

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