SoundExchange, the top digital royalty collection and distribution agency for the music industry, has filed a lawsuit against SiriusXM to recover an estimated $150 million in unpaid royalties and late fees owed under the Copyright Act for the use of sound recordings on the satellite streaming service. The payments cover the past “several” years, according to the documents, and date back to at least 2018.
SoundExchange previously successfully sued the satellite radio giant over claims dating from 2007 through 2017, and received a $150 million settlement the following year.
SiriusXM issued a lengthy response on Wednesday afternoon that is reprinted below in full.
The new lawsuit, filed Wednesday with the United States District Court for the Eastern District of Virginia, maintains that SiriusXM improperly manipulated the federal regulations to create an artificially low calculation of “revenue” on which it pays creator royalties. It claims that SiriusXM “accomplished this by ascribing excessive and unjustified value to the webcasting component of its bundled packages and then removing that value from the satellite radio royalty pool.”
SoundExchange is also seeking to recover other unpaid royalties revealed in an audit of SiriusXM that it says showed the company had taken certain other improper deductions to reduce its calculation of satellite radio royalties. It is seeking compensatory damages and late fees for the multiple years of underpayments, as well as an injunction preventing SiriusXM from continuing to use inappropriate revenue calculations on its satellite radio payments going forward.
“It is extremely unfortunate that we must bring this action on behalf of creators against SiriusXM,” said Michael Huppe, President and 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.”
In response, a rep for SiriusXM issued the following statement to PvNew: “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 requirethe 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.”
