Sirius Has Now Signed More Than 60 Direct Deals With Labels

It’s not enough to fill dozens of stations and satisfy thousands of subscribers – yet.  

But it’s a pretty remarkable start considering the level of resistance from the broader industry.  And, it may have been a game-changer in rate determinations just issued by the Copyright Royalty Board (CRB).

During extensive testimony in front of a panel of CRB judges, Sirius revealed that it has now successfully completed direct content licenses with ‘60-plus‘ labels, with more than 7,000 artists, 9,000 albums, and 110,000 songs represented.  “These licenses present the best possible evidence of how a competitive market values the rights covered by the statutory license – involving as they do transactions including the very same rights between the very same buyer and sellers as are involved in this proceeding,” the company declared.

Actually, these deals cover a broader range of uses than the rights being offered by SoundExchange, and fall into the below-market range of between 5 and 7 percent of Sirius’ gross revenue.  “The evidence will make clear that the market rate for sound recording performance rights… is actually below the current statutory rate,” Sirius continued.

“Record labels have agreed to royalty payments at rates between 5 and 7 percent of Sirius XM’s gross revenue.  Notably, these rates convey broader – hence arguably more valuable – rights than those governed by the statutory license, suggesting that this rate range, if anything, overstates the value solely of the statutory rates to be set by the Judges.”

Sirius also noted that this is the first time that concrete, actual deals have been presented to the CRB, meaning that the parties could finally stop pulling theoretical numbers out of the air.  The result, cheered by Wall Street in Monday trading and far below rates sought by SoundExchange and its label constituents, is this:

Section 114(f)(1) rates for Preexisting Satellite Digital Audio Radio Services, 2013-2017

(percentage of gross revenues)

9% for 2013

9.5% for 2014

10.0% for 2015

10.5% for 2016

11.0% for 2017

SoundExchange presented a far more aggressive schedule that ramped to 20 percent of revenue by 2017, with one resident expert pushing that figure into the 30 percent range.

Sadly, the backdrop on this story is ugly. SoundExchange and labels are battling over what rate Sirius XM Radio should pay for the use of its streams, and Sirius is alleging interference in court. Throughout, Sirius has pointed to extensive and collusive resistance against its direct-licensing efforts, and indie labels like Jagjaguwar testified against the Sirius proposals.  That said, the presence of actual, signed deals with defined percentages seem to have greatly influenced the outcome of this proceeding.

Names of the actual labels were sealed.  More documentation from the Copyright Royalty Board, here.

7 Responses

    • Casey

      Because the major labels will never give them what they want. There is absolutely no way the major labels will give them a licensing deal with both lower rates and allow them to offer a free service on mobile devices. SiriuxXM has a paywall requirement. That would almost certainly be a necessity for Pandora to get licenses. Then they would also have to deal with the streaming holdouts, which is something they currently do not have to worry about.

      • accurate

        “Because the major labels will never give them what they want”

        This is precisely the reason why congress should step in. As Casey has suggested in previous posts, if your supplier doesn’t give you what you want, you should go to the American congress and ask them to over-rule the free market. Why should a supplier (rights holders) stand in the way of using their input for your gain? Why should they have any say in the price you pay, or (god forbid) allow the market to dictate that price? Government exists, afterall, to decide issues of free market pricing.

        • Casey

          I never said congress should step in. But you know, it is kind of funny to see Pandora going to congress. I mean, it’s not like the music industry has ever been there before to get what they want. No, they have always let free market work things out.

        • paul

          Well, Article I, Section 8, Clause 8 of the U.S. Constitution empowers Congress i/r/t copyright, so there’s that.

  1. exactly

    Pandora is free to negotiate deals directly with rights holders. There is no need to adjust the statutory rate that was set by an impartial board (until that board reconvenes to reset the rates again with the latest information).

    In the meantime, Pandora is free to go direct to the rights holders.

    The free market is always an option for them.

  2. Paddy Noonan

    IMRadio’s revenue-share model is designed to provide a larger percentage of the revenue stream into IMRadio, its partners and especially its independent musicians’ pockets.

    Currently poised to begin a new era of revenue and profit generation, IMRadio already has 85,000 independent musicians’ original “royalty-free” songs in its internet radio rotation. The company will continue to attract independent musicians because of its planned revenue-share model. The revenue-share model is designed to provide a larger percentage of the revenue stream to its independent musicians, IMRadio, and partners.

    IMRadio never pays royalties on the music it broadcasts, enabling the company to offer a balanced revenue-share model for artist compensation. Clear Channel Communications, the nation’s largest radio broadcaster, recently bucked traditional royalty based compensation by instituting an ad revenue-sharing package for the label Big Machine Records. Now Sirius has seen the light. IMRadio had the foresight four years ago, when it went live on the Internet, to realize that the royalty model for artist compensation was going to be short-lived in this new digital age.

    IMRadio is re-creating a new Music Culture, focused on a profitable business model for both the new Music Industry AND Independent Musicians/Labels.

    IMRadio (Independent Musician Radio) is an innovative international entertainment company that has a passion for revolutionizing the music industry. IMRadio plans to empower the massive market of today’s independent musicians to actually make money with their music.