SoundExchange announced today that the company filed a lawsuit against SiriusXM to recover substantial unpaid royalties and late fees owed under the Copyright Act for the use of sound recordings on the satellite streaming service. SoundExchange estimates that SiriusXM has wrongfully withheld more than $150 million in unpaid royalties over the past several years.
As the sole entity appointed by the United States government to collect and distribute digital streaming royalties under Section 114 of the Copyright Act, SoundExchange’s lawsuit, filed today with the United States District Court for the Eastern District of Virginia, maintains that SiriusXM improperly manipulated the federal regulations to create an artificially low calculation of “revenue” on which it pays creator royalties. Specifically, SiriusXM accomplished this by ascribing excessive and unjustified value to the webcasting component of its bundled packages and then removing that value from the satellite radio royalty pool.
In addition, SoundExchange is seeking to recover other unpaid royalties revealed in an audit of SiriusXM that showed the company had taken certain other improper deductions to reduce its calculation of satellite radio royalties.
“It is extremely unfortunate that we must bring this action on behalf of creators against SiriusXM,” said Michael Huppe, President and CEO of SoundExchange. “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.”
SoundExchange is seeking compensatory damages and late fees for the multiple years of underpayments, as well as an injunction preventing SiriusXM from continuing to use inappropriate revenue calculations on its satellite radio payments going forward. To view the official filing, click HERE.
