As the satellite broadcaster rebrands in search of revenue, a class action lawsuit in Washington state is accusing SiriusXM of misleading consumers with a hidden “US Music Royalty” fee, which is not included in the initially advertised subscription rates.
This fee purportedly increases the total cost of the company’s music plans by 21.4% at checkout, a practice not observed with other music services that include all necessary costs in their advertised prices.
The legal claim highlights that the advertised prices for SiriusXM’s subscription plans are presented without the additional 21.4% fee, which is noted separately as “plus fees and taxes” in smaller type. For the Platinum plan priced at $23.99 per month, the music royalty fee adds an additional $5.13.
The lawsuit says with around 33.9 million subscribers, these fees significantly boost SiriusXM’s revenue, surpassing its net profits with a total collection of $1.36 billion in music royalty fees in 2023 alone.
The suit criticizes SiriusXM for labeling the royalty fee as a seemingly government-mandated charge under the vague category of “fees and taxes.” This alleged misrepresentation leads consumers to believe it pertains mainly to standard sales taxes, which vary and are commonly added to digital services in the US. These fees primarily constitute the music royalty fee, crafted by SiriusXM, according to the lawsuit.
The lawsuit seeks an injunction to force SiriusXM to include the music royalty fee in its listed subscription prices and demands damages for subscribers who were not made aware of these costs upon signing up, with claims potentially exceeding $5 million.
This comes after royalty distributor SoundExchange filed a lawsuit against SiriusXM in the US District Court for the Eastern District of Virginia last August, accusing the satellite broadcaster of failing to pay over $150 million in royalties. The suit claims SiriusXM manipulated federal regulations to underreport “revenue” for royalty calculations.
SoundExchange alleges that SiriusXM assigned an inflated value to the webcasting segment of its bundled services, thereby shrinking the royalty pool for satellite radio.
SiriusXM reported a slight revenue increase in Q1 2024, achieving $2.16 billion – up 1% from $2.14 billion the previous year. The company’s profits also grew, reaching $265 million, compared to $233 million last year. While advertising revenue rose by 7%, there was a minor 1% drop in subscription revenue.
