Weeks after its appeal against the Copywrite Royalty Board was dismissed, SoundExchange is involved in more litigation – this time against SiriusXM. The digital streaming royalties collector has filed a lawsuit in the US District Court for the Eastern District of Virginia accusing the satellite broadcasting company of withholding more than $150 million in unpaid royalties.
The lawsuit alleges that Sirius XM has manipulated federal regulations to create an artificially low calculation of “revenue” on which it pays creator royalties. Specifically, SoundExchange claims Sirius XM ascribed an “excessive and unjustified value” to the webcasting part of its bundled packages, thus reducing the satellite radio royalty pool. An audit of Sirius XM also revealed other deductions that SoundExchange believes were improper in calculating satellite radio royalties.
SoundExchange President/CEO Michael Huppe said, “It is extremely unfortunate that we must bring this action on behalf of creators against SiriusXM. 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.”
Sirius XM’s response? “We were surprised to see the press release from SoundExchange … 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… 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.”
This system is such a joke. iHeart pays also games the system and pays next to nothing and the payments it does pay are often misallocated. The problem is that most of these services use Gracenote, Nielsen’s subpar identification service that serves only the needs of major labels, misidentifies songs and is borderline useless for anything but major label artists. Even SoundExchange doesn’t have the staff or legal department big enough to make other providers comply (looking at you Mixcloud). The system is rigged and broken.