US-headquartered performance rights organization SoundExchange is appealing its loss of a lawsuit against SiriusXM over allegedly underpaid royalties.
“In filing of a notice of appeal with the US Court of Appeals for the Second Circuit, SoundExchange has taken the first step in rectifying the lower court’s erroneous ruling and flawed interpretation of… the US Copyright Act,” SoundExchange said in a statement on Friday (September 5).
Last month, Judge Naomi Reice Buchwald of the US District Court for the Southern District of New York dismissed SoundExchange‘s lawsuit against SiriusXM, ruling that Congress has never granted the PRO the authority to file lawsuits on behalf of the rightsholders on whose behalf it collects royalties.
Under the Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act (DMCA) of 1998, SoundExchange is authorized to collect and distribute performance royalties on sound recordings.
However, the Judge Buchwald concluded that the law as it stands “does not authorize SoundExchange to litigate royalty disputes.”
SoundExchange said the ruling was “entirely wrong on the law.”
“As Congress surely realized in creating the statutory license, some licensees will seek any available means to avoid paying artists for the full value of their work to maximize profitability,” Sound Exchange said.
“For the statutory license to function properly, SoundExchange fully believes Congress intended that the ‘enforcement’ power clearly granted in the statute must necessarily include the ability of its administrator to bring litigation claims when digital music services fail to meet their obligations under the law.”
“SoundExchange fully believes Congress intended that the ‘enforcement’ power clearly granted in the statute must necessarily include the ability of its administrator to bring litigation claims when digital music services fail to meet their obligations under the law.”
SoundExchange
SoundExchange said that, while the courts discuss the issue, SiriusXM “continues to apply its faulty methodology for determining its statutory obligations… and to underpay artists and labels for the use of their sound recordings.”
It estimates that the impact of SiriusXM’s alleged underpayment is now more than $400 million.
SoundExchange sued satellite radio service SiriusXM in 2023, alleging that the satellite radio service had underpaid the royalties it owed on music recordings by around $150 million at that time.
SoundExchange alleged that SiriusXM had undercounted what it owed in royalties by allocating an excessive amount of its revenue to the music streaming service that it launched in 2017.
Satellite radio operators pay royalties as a percentage of their revenues, but the revenue used for the calculation excludes certain other activities, such as webcasting. Thus, if a satellite broadcaster shifted revenue from satellite operations to streaming, they would owe less in royalties to artists and labels represented by SoundExchange.
SiriusXM has denied it is undercounting satellite revenue to avoid paying royalties, and has said its royalty calculations are “rigorous, tested and fair.”Music Business Worldwide
