SiriusXM Sued by SoundExchange Over $150 Million Royalty Underpayment Claim

SoundExchange, the top digital royalty collection and distribution agency for the music industry, has filed a lawsuit against SiriusXM to recover an estimated $150 million in unpaid royalties and late fees owed under the Copyright Act for the use of sound recordings on the satellite streaming service. The payments cover the past “several” years, according to the documents, and date back to at least 2018.

SoundExchange previously successfully sued the satellite radio giant over claims dating from 2007 through 2017, and received a $150 million settlement the following year.

The new lawsuit, filed Wednesday 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. It claims that 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.” 

Reps for SiriusXM did not immediately respond to Variety‘s request for comment on Wednesday.

SoundExchange is also seeking to recover other unpaid royalties revealed in an audit of SiriusXM that it says showed the company had taken certain other improper deductions to reduce its calculation of satellite radio royalties. It 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.

“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.”

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