Though the nine-year-old satellite radio service has paid record labels and artists hundreds of millions of dollars annually while promoting unsigned and emerging acts on its niche music channels, SiriusXM's relationship with the industry has grown more contentious recently.
According to Billboard, the issues between them range from whether SiriusXM should pay to play songs copyrighted before 1972 -- the subject of an imminent bill in Congress -- to the rates it should pay for the music on its service during the next five years, a matter currently being argued before the Copyright Royalty Board.
And now, following SiriusXM's $480 million investment in Pandora in June, some label insiders fear SiriusXM will use its new clout to upend the direct licensing deals Pandora inked last summer, which led to its on-demand subscription service. One label executive says that SiriusXM seemed more interested in using Pandora as "a giant free tier to drive their in-car subscription products." A representative for SiriusXM declined to comment.
SiriusXM "increasingly seems to choose conflict over partnership," says Steven Marks, the RIAA's general counsel and chief of digital business, adding that the company is getting less sympathy because it "publicly touts its financial success." Thanks in part to federal regulations limiting royalty payouts to 11 percent of revenue in 2016, SiriusXM earned $746 million on $5 billion in revenue last year. Pandora, by contrast, spends about half of its revenue on music because its costs are based on usage, while Spotify, whose losses are also ballooning, spends closer to 70 percent.
Marks says SiriusXM is fighting to keep paying "below market" rates that are "unfair" to artists and the rest of the digital-radio market. The company contends it pays what is required under federal law.
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