Federal Judge Refers SoundExchange’s Music Choice Lawsuit to Copyright Royalty Board

SoundExchange Releases 'Music Data Exchange (MDX)' - Here's Everything You Need to Know
  • Save

Back in April of 2019, SoundExchange sued Music Choice over a “persistent effort to avoid paying royalties.” Now, the legal battle has been referred to the Copyright Royalty Board (CRB).

In the original complaint, SoundExchange claimed that the television-focused music network Music Choice had “systematically underpaid statutory royalties” specifically on the “business establishment service” (BES) end.

The latter encompassed the more than “‘50 channels of CD quality music’” that the company had offered to commercial establishments between January of 2013 and the end of 2016, the firmly worded action made clear.

Regarding the delay between the period’s end and the lawsuit’s start, “SoundExchange engaged an independent auditor to verify the royalty statements” submitted by Music Choice, the legal text specified, and this multiyear probe ran into 2018.

And in terms of the long-running litigation’s other pertinent details, Music Choice’s alleged royalties underpayment on business services involved “an allocation of the fees and payments it receives for providing its BES in a manner not contemplated by the CRB’s regulations,” with a corresponding underreporting of gross revenues to SoundExchange, per the complaint.

According to CRB statutes, the not-for-profit collector of domestic non-interactive digital radio royalties, which totaled almost $950 million in 2020, is entitled to 12.5 percent of gross revenues from Music Choice’s BES operations for the period in question.

As mentioned at the outset, the years-long courtroom showdown between SoundExchange and Music Choice has now been referred to the three-judge Copyright Royalty Board, currently consisting of Judge David Strickler (whose term will end next month), Judge Steve Ruwe, and, since early November, interim Chief Judge Suzanne Barnett, who previously held the post between 2012 and 2019.

A new order from U.S. District Judge Reggie B. Walton stayed the SoundExchange-Music Choice case “pending a decision” from the CRB. Additionally, Judge Walton set a status teleconference for Tuesday, June 21st, 2022, and called on the involved parties to “file a joint status report proposing a schedule governing further proceedings in this case” within 30 days of the CRB’s decision.

At the time of this piece’s publishing, Music Choice didn’t appear to have commented on the lawsuit’s referral to the CRB on social media or via a statement on its website. It bears mentioning in conclusion that the CRB today announced that it had received from SoundExchange “notices of intent to audit the 2018, 2019, and 2020 statements of account submitted by commercial webcasters Audacy and Midwest Communications concerning the royalty payments they made pursuant to two statutory licenses.”

Philadelphia-headquartered Audacy (NYSE: AUD) offers digital access to a number of radio stations, while 63-year-old Midwest Communications describes itself as “a family owned media company with 81 radio properties.”