SiriusXM Subscribers Will Pay More To Cover Increased Song Royalties!

Image634913347777866308On December 14, 2012, the Copyright Royalty Judges issued their Initial determination setting higher rates and terms for the digital performance of sound recordings and the making of ephemeral recordings by preexisting subscription services (PSS) and preexisting satellite digital audio radio services – meaning SiriusXM, the only operating satellite broadcasting company operating in the United States.

The rate paid by satellite radio for the use of sound recordings, currently 8 percent of the company’s gross revenue, would climb to 9 percent in 2013, and then rise 0.5 percentage point each year until reaching 11 percent in 2017. That money will be paid to SoundExchange, a nonprofit group that distributes digital royalties to record labels and musicians.

The last time the Copyright Royalty Board set rates for satellite radio, in late 2007, Sirius and XM were still struggling as separate companies; they merged the next year and still nearly went bankrupt before getting a $530 million loan from Liberty Media in 2009.

Since then, the merged Sirius XM has grown substantially and become profitable. It now has more than 23 million paying subscribers. In its most recent quarterly accounts, it reported that it was holding $556 million in cash.

Music royalty rights were established by Congress and are the product of the Copyright Act. Unlike terrestrial radio, SiriusXM is required to pay copyright music royalties to recording artists, musicians and recording companies who hold copyrights in sound recordings (the actual recording of a work). Like terrestrial radio, SiriusXM must also pay music publishers who hold copyrights in musical compositions (or the lyrics and music) through their collective organizations such as ASCAP and BMI.

Increased fees to SiriusXM will ultimately be passed on to the consumer for those who’s subscription plans include music channels.  The company’s website states:  “The fee is automatically added to your bill. There will be no change to your current plan and that plan will remain in effect without change until your next renewal date.”

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