Sirius XM Faces Lawsuit Over ‘US Music Royalty Fee’ Surcharge That Adds 21% to the Monthly Subscription Cost

SiriusXM faces lawsuit over royalty fee surcharge
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SiriusXM faces lawsuit over royalty fee surcharge
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Photo Credit: JP Valery

Sirius XM faces a class action lawsuit over ‘US Music Royalty’ fee that adds 21% to the monthly subscription cost.

Sirius XM is being sued over its “US Music Royalty” fee, a surcharge added on top of the advertised subscription cost to cover what the satellite radio company owes the music industry. The fee increases the price of any US-based Sirius satellite radio subscription with access to music by 21.4%.

The class action lawsuit filed in Washington state says any “reasonable consumer” would expect that the advertised price for the service would include any “fundamental costs” associated with accessing music content. No other music services, it insists, charge a separate royalty fee “over and above their advertised music plan prices.”

“This action challenges a deceptive pricing scheme whereby Sirius XM falsely advertises its music plans at lower prices than it actually charges,” the lawsuit reads. “Sirius XM fails to include in its advertised prices the amount of its invented ‘US Music Royalty Fee,’ which increases the true plan price by 21.4% above the advertised price for the plans.”

The lawsuit states that Sirius advertises its satellite radio subscription plans before applying the 21.4% fee, alongside the phrase “plus fees and taxes,” usually in a smaller typeface. Around 33.9 million subscribers are affected by this additional fee, which, according to the lawsuit, generates massive revenue; in 2023, the total music royalty fees collected by the company exceeded $1.36 billion — more than the company’s entire net profit of $1.26 billion.

In the US, it’s common for sales taxes to not be included in the advertised price of a service because taxes vary by state. But the lawsuit claims that the additional fees Sirius charges are almost entirely the music royalty fee, especially in states like Oregon, which have no sales tax.

The subscribers behind the lawsuit stress that they do not oppose creatives, labels, and publishers getting paid when music is played on Sirius services — but paying for music when you run a music streaming service is a core business expense, and shouldn’t be presented as an “added fee” to subscribers.

Further, they assert that Sirius is presenting the music royalty fee as if it’s a government mandated charge in order to bundle it under the ambiguous “fees and taxes” category. But that fee has been entirely fabricated by the company, the lawsuit claims.

Sirius claims on their website that “music royalty rights were established by Congress and are the product of the Copyright Act,” which is accurate. But the lawsuit argues that any company using copyright protected works is obligated under copyright law and not justified in making the required royalties an extra fee for subscribers.

The lawsuit is seeking an injunction to force Sirius to advertise its subscription prices with the music royalty fee included, plus damages for the affected subscribers, the amount of which would be decided in court. The lawsuit names subscribers in Washington and Florida, while similar lawsuits have been filed in Oregon and New York.