Sirius XM Radio Inc (SIRI) Gets Sued For Music Royalties Based On Pre-1972 Recordings

Posted Aug 27, 2013

Sirius XM Radio Inc (NASDAQ:SIRI) is being sued by a U.S. based nonprofit for at least $50 million.  The nonprofit is in charge of collecting digital royalties for music artists.  SoundExchange Inc. believes that Sirius is underpaying the royalties on recordings, including ones that were created before 1972.

SoundExchange Inc. filed the lawsuit at the U.S. District Court for the District of Columbia by SoundExchange Inc.  The Copyright Royalty Board appointed SoundExchange Inc. to collect and distribute performance royalties established under federal law.

According to the lawsuit, Sirius XM Radio Inc (NASDAQ:SIRI)  allegedly underpaid SoundExchange for the statutory license that allows the service to air recordings to its millions of paying subscribers.  Sirius XM Radio Inc (NASDAQ:SIRI) allegedly reduced by 10-15% the gross revenues it reports to calculate the royalties that corresponded with performances of pre-1972 recordings.

“We cannot sit by and watch this multi-billion dollar company reap record profits from the creative contributions of artists and labels without paying them everything they deserve,” stated SoundExchange chief executive officer Michael Huppe.

The royalty rate that would be charged against those gross revenues ranged from 6% in 2007 to 8% in 2012.  These are the rates set by the Recording Industry Association of America.

SoundExchange said that Sirius XM Radio Inc (NASDAQ:SIRI) took a position that the statutory license established under federal law does not cover pre-1972 recordings.  The sound recordings were not given federal copyright protection until 1972 and relied on state laws for protection.

SoundExchange also accused Sirius XM Radio Inc (NASDAQ:SIRI) of excluding money that they earned from subscriptions of the Sirius XM Premier package from their revenue calculations.

SoundExchange is seeking between $50 and $100 million or more along with late fees and interest.  The lawsuit was filed as SoundExchange Inc v. Sirius XM Radio Inc, U.S. District Court, District of Columbia, No. 13-01290.

[Source: Reuters]