Nonprofit sues SiriusXM to recover underpayment of digital royalties

By Jessica M. Karmasek | Aug 28, 2013

WASHINGTON (Legal Newsline) -- SoundExchange Inc., a non-profit performance rights organization, is suing SiriusXM Radio Inc. to recover what it calls a "massive underpayment" of digital royalties.

The lawsuit was filed in the U.S. District Court for the District of Columbia Monday.

SoundExchange -- which collects royalties on behalf of the sound recording copyright owners and featured artists for non-interactive digital transmissions like satellite and Internet radio -- alleges that SiriusXM took a number of impermissible deductions and exemptions in calculating its royalty payments from 2007-12.

In particular, SoundExchange alleges the satellite radio company deducted for pre-1972 sound recordings and certain channel packages containing music.

SiriusXM is required to pay the nonprofit for the use of the statutory license, which allows the service to broadcast any commercially available sound recording.

In addition, the nonprofit alleges that SiriusXM failed to pay the legally required fees due for several late payments within the same period.

SoundExchange noted that during the same time period that the satellite radio company underpaid musicians for this "critical part" of their service, the company saw its subscriber base grow from 17 million to 24 million and its revenue increase from $2.06 billion to $3.4 billion.

"SiriusXM is knowingly withholding royalties from the creators who bring life to their service, even as the company continues to experience unprecedented and explosive growth," Michael Huppe, SoundExchange's president and CEO, said in a statement Monday.

"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."

SoundExchange said it believes SiriusXM's underpayments amounted to $50 million to $100 million, or more, which it is seeking to recover on behalf of the artists and labels it represents.

To view the nonprofit's 17-page complaint, click here.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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