SiriusXM Moves To Dismiss SoundExchange’s $150 Million Unpaid-Royalties Lawsuit on Jurisdictional Grounds

siriusxm soundexchange lawsuit
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siriusxm soundexchange lawsuit
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Alexandria, Virginia. Photo Credit: Duane Lempke

Last month, SoundExchange sued SiriusXM for allegedly failing to pay north of $150 million in owed royalties. Now, the satellite radio giant has moved to dismiss the complaint on jurisdictional grounds.

Liberty Media-owned SiriusXM just recently filed to have the case tossed or, alternatively, transferred to a different venue. In brief, SoundExchange submitted the original suit to a Virginia federal court, maintaining that the defendant business had “artificially” inflated webcasting revenue within its joint satellite and online radio packages.

As described in detail in our initial coverage, this purported inflation then allegedly set the stage for SiriusXM to capitalize upon a Copyright Royalty Board-established revenue exclusion and, in the process, avoid paying millions to artists and rightsholders. (SiriusXM specifically pays a flat percentage of gross revenue for a statutory license on the satellite side; the amount owed for online radio, on the other hand, is calculated on a per-play basis, with the CRB exclusion designed to prevent overlapping payments.)

Separately, SoundExchange, citing the results of a years-long audit performed by New York’s Adeptus Partners, claimed that the defendant had underpaid “millions of dollars” in royalties during 2018. SiriusXM promptly fired back, communicating that it was “disappointed with the actions taken by SoundExchange” and indicating that it had abided by the “clear regulatory framework” at hand.

As mentioned at the outset, this public rebuttal has now been followed by a formal motion to dismiss or, alternatively, transfer the case.

In a declaration in support of the dismissal/transfer motion, Catherine Brooker, SiriusXM’s SVP of corporate finance, emphasized that her company is headquartered in New York City and that this main office sends royalty payments to SoundExchange.

Also in the straightforward document, Brooker claimed that “employees with direct knowledge of…current and historic royalty calculation practices more generally are based primarily in New York.”

“As for Virginia,” Brooker wrote of the push to dismiss and/or move the suit from Old Dominion, “Sirius XM employs only five Virginia-based employees who manage network operations out of a technical facility in Fredericksburg—operations completely unrelated to finance or royalty calculations.”

A different filing shows that SiriusXM is scheduled to argue in favor of the dismissal/transfer motion during a hearing on the morning of Thursday, October 19th.

In early August, a Q2 2023 earnings report revealed that SiriusXM had lost about 500,000 customers during the preceding 24 months, with subscribers likewise trending downward for its Pandora subsidiary.

SoundExchange, for its part, disclosed earlier in September $269 million worth of second-quarter royalty distributions, representing a 17 percent year-over-year boost on the heels of a downturn for the entirety of 2022. H1 2023 payouts totaled $497.8 million, according to the two-decade-old entity.