For a good recap of the developments in the RIAA's lawsuit against XM, and the public relations campaign XM has undertaken as a result, read Carlos Bergfield's article at BusinessWeek Online titled "XM vs. The Industry -- And Congress."

Here's the heart of the matter:

"What the recording industry doesn't like is the fact that subscribers can go back to a block of recorded programming and chop it up into different songs with the help of the players, which label songs individually. The PERFORM Act would make this illegal, but the RIAA says XM is already breaking the law."

XM is attempting to motivate its subscribers, which is far cheaper than defending itself in court. Gadgetall has an email that XM sent out to its subscribers. An excerpt:

"They don’t get it. These devices are clearly legal. Consumers have enjoyed the right to tape off the air for their personal use for decades, from reel-to-reel and the cassette to the VCR and TiVo. ... Satellite radio subscribers like you are law-abiding music consumers; a portion of your subscriber fee pays royalties directly to artists. Instead of going after pirates who don’t pay a cent, the record labels are attacking the radios used for the enjoyment of music by consumers like you."

XM pays royalties directly to artists? That's a funny, feel-good PR thing to say. (I guess consumers don't need to know how artists get paid for radio airplay.) Anyway, the issue here is whether or not the XM portable device's creation of a digital file requires an additional license. Does anybody expect the RIAA to sit this one out because the songs can't be transfered off the device or because the sound quality is relatively poor? Me neither. Let's see how this one plays out.