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.