SoundExchange Sues SiriusXM

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SoundExchange has filed a lawsuit against SiriusXM, in order to “recover substantial unpaid royalties and late fees owed under the Copyright Act for the use of sound recordings on the satellite streaming service,” according to an announcement from the organization. SoundExchange alleges that SiriusXM has withheld more than $150 million in unpaid royalties over the past several years, in their estimation.

SoundExchange is also seeking other unpaid royalties that they claim were revealed in an audit showing that SiriusXM had taken certain “improper deductions to reduce its calculation of satellite radio royalties.”

“It is extremely unfortunate that we must bring this action on behalf of creators against SiriusXM,” says Michael Huppe, President & CEO of SoundExchange. “In recent years we have viewed SiriusXM as a willingly lawful and compliant company that shares our desire for a robust streaming marketplace. But SiriusXM has and continues to wrongfully exploit the rules to significantly underpay the satellite royalties that it owes. It is only because our repeated efforts to resolve this dispute have failed that we are forced to litigate on behalf of artists and rights owners upon whose hard work SiriusXM has built its business.”

To view the official filing, click here.

In a statement shared with MusicRow, SiriusXM shared, We were surprised to see the press release from SoundExchange that it had filed a suit against SiriusXM this morning in the United States District Court for the Eastern District of Virginia. SiriusXM has always respected the rights of creators and artists, and over the past ten years has paid SoundExchange royalties of over $5 billion dollars. Today, royalty payments from SiriusXM represent over 80% the statutory royalties that SoundExchange distributes to record labels and performers.

At the heart of today’s suit by SoundExchange are ordinary course disputes – an audit matter and an allocation of revenue from bundled products, specifically where subscribers pay for a package providing both our satellite radio product and the ability to stream our service. The regulations issued by the Copyright Royalty Board (CRB) governing SiriusXM’s royalty payments for satellite radio are carefully tailored with respect to such packages. The CRB requires SiriusXM to only pay royalties on revenue it earns for performances of sound recordings on its satellite service. Those same regulations require the Company to exclude from the royalty base revenue earned for activities that are covered by other licenses, including streaming.

SiriusXM has simply adhered to that clear regulatory framework, using a rigorous, tested and fair methodology to identify and allocate revenue for the streaming component of its bundled packages—a methodology completely consistent with precedent from the CRB. Furthermore, SiriusXM has been transparent with SoundExchange from the start on its methodology.

While we are disappointed with the actions taken by SoundExchange today, we remain committed to paying artists fairly for their work, and will continue to work collaboratively with SoundExchange, as we have for decades, to ensure they are paid properly under the governing regulations.”

LB Cantrell
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