Is Slacker Headed for Bankruptcy? Company Says SoundExchange’s $10 Million Judgment Could Destroy Them

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Photo Credit: SoundExchange

Is Slacker headed for bankruptcy? The company says SoundExchange’s $10 million judgment could destroy them.

Slacker and its parent company LiveOne (formerly LiveXLive) are pleading with a judge to overturn a ruling requiring the streaming company to pay $10 million in unpaid royalties. SoundExchange has been battling with Slacker in court since June and won a ruling from Judge Andre Birotte Jr. that Slacker (and LiveOne) must pay nearly $10 million in full to the artists and labels to whom it owes. LiveOne argues that such an amount will cause the company financial ruin, but SoundExchange doesn’t care.

“The court should deny defendants’ lastest attempt to shirk their obligations with the promise that next time will be different,” SoundExchange’s lawyers write, stating that Slacker has avoided paying for music for years. The plaintiff’s lawyers continue saying that more robust measures are “necessary to protect performing artists.”

SoundExchange, the organization that collects performance royalties for sound recording copyrights, sued LiveOne in June, alleging that the company stopped paying artists and labels back in 2017. The two entered into a repayment plan in 2020, giving Slacker two years to pay its debts. But SoundExchange claims that the company did not meet the terms of the agreement.

“By refusing to pay royalties for the use of protected sound recordings, Slacker and LiveOne have directly harmed creators over the years,” said SoundExchange president and CEO Michael Huppe. “SoundExchange is taking a stand through necessary legal action to protect the value of music and ensure creators are compensated fairly for their work.”

LiveOne’s lawyers said that SoundExchange’s $10 million judgment had caused creditors to call in regarding other debts owed and that being forced to pay such an amount would make the company “unsustainable.” 

“If LiveOne does not promptly discharge SoundExchange’s default judgment, the secured creditors will accelerate the loans and call for immediate repayment of principal and unpaid interest,” write LiveOne’s lawyers.

“Five years is long enough,” SoundExchange’s lawyers wrote in response. “SoundExchange has no obligation to negotiate ad infinitum with defendants, who have demonstrated at every opportunity that they will leverage the creativity of others without compensation.”

“Defendants’ contention that the judgment poses an existential threat to their business is difficult to square with their lackadaisical approach to finding counsel and subsequent non-adherence to the court’s deadlines,” SoundExchange’s lawyers added.