Suit claims 'massive wholesale infringement.'

The major record companies have sued XM Satellite Radio over its XM + MP3 service claiming "massive wholesale infringement" of their recordings.

The suit, filed today (May 16) in the federal District Court in New York, calls the service a "digital download" service that has not been properly licensed.

The dispute puts the spotlight on debates between record labels and satellite radio services over devices that record, store, disaggregate and library music performed over the subscription satellite services.

XM has taken the position in the past that it pays for the public performance of the sound recordings under its license with SoundExchange, which negotiates and collects royalties with non-interactive digital services. Equipment manufacturers pay royalties on all recording devices.

"These are legal devices that allow consumers to listen to and record radio just as the law has allowed for decades," XM said in a statement. "The music labels are trying to stifle innovation, limit consumer choice and roll back consumers’ rights to record content for their personal use. This is a negotiating tactic on the part of the industry to gain an advantage in our private business discussions. XM Radio is the largest single payer of digital music broadcast royalties, and royalties paid by XM go to the music industry and benefit artists directly. XM will vigorously defend this lawsuit on behalf of consumers."

Record labels have taken the position that the new devices turn performances—or licensed broadcasts—into downloads, which require individually negotiated licenses.

“Not only are we fans of satellite radio, we consider ourselves partners and we celebrate the industry’s growth," the RIAA said in a statement. "From the outset, we understood the mutual benefits of digital broadcasts. In fact, we provided them with a major price break in our initial licensing agreement to help the industry get off the ground. That agreement has made it possible for satellite radio to grow.

“As we continue to transform our business model, the integrity of the digital marketplace is more important than ever. We want to work with our various partners to offer fans an extraordinary music experience in a variety of different ways, but everyone must play by the same set of rules and fairly compensate labels, artists, songwriters and publishers.”

The labels ask the court for a declaration that XM has willfully infringed their copyrights and for an award of damages in an unspecified amount.