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SiriusXM Fights to Lower Music Licensing Fees

Satcaster case could have repercussions for Web radio

It remains to be seen how SiriusXM’s attempt to go around SoundExchange and the American Association of Independent Music in order to conduct business directly with music labels and lower music licensing fees will turn out.

The satcaster has sued both organizations, saying the groups want SiriusXM to rely exclusively on them to obtain music licensing that has been negotiated with the music industry or on the outcome of regulatory rate-making proceedings. Web radio, too, negotiates with SoundExchange for music royalties and the outcome of the case could impact how royalties for Web streams are calculated, according to Davis Wright Tremaine attorney David Oxenford, who writes what could happen if SiriusXM wins. “Lower direct licensing rate could impact not only the rates paid by SiriusXM, but also other proceedings dealing with the sound recording royalty rate, including potentially proceedings for webcasting royalties (proceedings that will also affect the rates that broadcasters pay for streaming their signals).”

NAB negotiated a rate with SoundExchange for broadcast streams. Broadcast radio negotiates with ASCAP and BMI for music licensing fees.

In its complaint, filed in U.S. District Court for the Southern District of New York, SiriusXM contends that the conduct of SoundExchange and A2IM violates federal antitrust and New York state law by eliminating price competition.

The satcaster says that although SiriusXM has the legal right to reach out to individual record companies for such licenses, SoundExchange, in collaboration with other record industry organizations, has orchestrated an illegal boycott designed to choke off such competition.

SiriusXM is trying to lower its music licensing costs. The company says it has signed nearly 80 direct music licenses to date and would have signed more had it not been for interference from SoundExchange and A2IM.

Neither SoundExchange nor A2IM would comment, according to a Wall Street Journal account.