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SoundExchange has filed a lawsuit against SiriusXM, claiming that the satellite and streaming radio service owes around 0 million in royalties to music labels. The lawsuit alleges that SiriusXM failed to make royalty payments after bundling its satellite and streaming music services together. Unlike AM and FM radio, satellite and streaming radio providers are required to pay for public performances of copyrighted music. SoundExchange, the organization responsible for collecting royalty payments on behalf of record labels, asserts that the payments were not made despite a surcharge called the U.S. Music Royalty Fee that SiriusXM charges consumers.

Historically, the CRB calculated royalty payments for SiriusXM’s satellite radio service based on a percentage of the company’s revenue. However, the royalty rate is different for companies that offer streaming music services. The lawsuit alleges that SiriusXM used an “entirely arbitrary” formula to determine how much it owed in royalties when it began offering access to its streaming platform to satellite radio customers for free. Later, when the company bundled access to the streaming platform with satellite radio plans, it used creative accounting to determine the revenue that should go toward royalty payments. As a result, SiriusXM withheld a larger sum in royalty payments, paying around 25% less than before the change.

SoundExchange hired an independent auditor who found that SiriusXM had improperly withheld payments covered under rates set by the Copyright Royalty Board. Despite attempts to resolve the issue, SiriusXM refused to make back payments, leading SoundExchange to file the lawsuit.

SiriusXM maintains that it has followed the regulatory framework, paying performance royalties for its satellite service and a different license for streaming products. The company states it has been transparent in its methodology and is committed to paying artists fairly for their work. The lawsuit comes during a time when SiriusXM is seeking to reverse several financial quarters of slow subscriber growth.

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