SiriusXM’s handling of music royalty fees is under renewed legal pressure, with two high-profile cases advancing in parallel. A proposed class action alleges the company misled subscribers about added charges, while negotiations with SoundExchange fail.
A federal judge has ruled that a class action lawsuit against SiriusXM may proceed. The case, brought by four plaintiffs, alleges SiriusXM deceptively advertised its subscription pricing by failing to clearly disclose an additional 21.4% “US Music Royalty Fee.”
Plaintiffs contend that SiriusXM misled customers by promoting flat subscription prices without including or adequately explaining the added fee. The lawsuit claims SiriusXM collected $1.36 billion in music royalty fees in 2023, with charges like $5.13 added to its $23.99 Platinum plan. The suit says this omission violated Washington State’s Consumer Protection Act and the implied covenant of good faith and fair dealing.
The judge ruled that those claims are sufficiently plausible to proceed, noting the label “fees and taxes” may have given the impression that the charge was a government mandate. However, claims under Florida law were dismissed due to lack of jurisdiction, as the court found no legal basis to hold SiriusXM accountable in Washington for conduct that occurred in Florida.
The judge also dismissed requests for an injunction against SiriusXM’s advertising practices, citing the company’s recent shift to “all-in pricing” that now includes the royalty fee in listed prices. Still, the court granted plaintiffs the opportunity to amend those claims.
The lawsuit focuses on consumer transparency and whether SiriusXM adequately disclosed what it described as the US Music Royalty Fee, especially since plaintiffs allege they were told it was a government-imposed pass-through, when in fact it was kept as profit.
The court found that while SiriusXM’s customer agreements mention the fee, they do not clearly define it, and that statements made during phone sales may have failed to inform customers about the additional charge.
Plaintiffs now have until August 13 to amend their complaint.
Meanwhile, settlement talks between SiriusXM and SoundExchange over the latter’s $150 million royalty lawsuit have fallen apart after a 45-day pause.
SoundExchange’s case centers on allegations that SiriusXM underpaid digital performance royalties by manipulating the value of webcasting in bundled subscriptions. While both sides pursue resolution, SiriusXM is countersuing, accusing SoundExchange’s auditor of bias and seeking to invalidate the royalty audit.
