SoundExchange isn’t giving up its royalty collection enforcement abilities without a fight. The performance rights organization has filed a notice of appeal in its $150 million royalty dispute with SiriusXM, following an unfavorable dismissal with sweeping implications.
The appeal, now in the US Court of Appeals for the Second Circuit, follows an August ruling by US District Judge Naomi Reice Buchwald that dismissed SoundExchange’s complaint on the grounds that the Copyright Act does not authorize the collective to bring lawsuits for underpayment of royalties.
The ruling stripped SoundExchange of its lone enforcement tool, legal action, holding that Section 114 of the Copyright Act provides no express or implied right of action on the organization’s part. Instead, enforcement must come from individual copyright holders or Congress. Judge Buchwald pointed to Section 115, which grants the Mechanical Licensing Collective explicit authority to sue, noting that Congress could have done the same for SoundExchange but chose not to.
In a statement to Billboard, SoundExchange said, “For the statutory license to function properly, SoundExchange fully believes Congress intended that the ‘enforcement’ power clearly granted in the statute must necessarily include the ability of its administrator to bring litigation claims when digital music services fail to meet their obligations under the law.”
SoundExchange’s original lawsuit alleged that SiriusXM underpaid royalties in 2018 by bundling satellite and streaming subscriptions, thereby reducing reported revenue. An audit by Adeptus Partners was cited as evidence of the underpayments, though the court never reached the merits, ruling only on standing.
The case has drawn significant industry attention. Amicus briefs supporting SoundExchange were filed by the Recording Industry Association of America, SAG-AFTRA, the American Federation of Musicians, and the American Association of Independent Music, all warning that artists and labels would suffer reduced payments if the collective cannot litigate.
SoundExchange previously settled a separate $150 million royalty case with SiriusXM in 2018. The current appeal could test whether Congress or the courts will ultimately determine if SoundExchange can act as an enforcement proxy for rights holders under statutory licenses.
