SiriusXM To Pay Higher Royalty Rate

Sirius XM Holdings Inc. will pay almost 41% more for the music it plays on its satellite-radio service starting next year, the federal Copyright Royalty Board decided late Thursday, though labels and artists feel the increase still falls short.

The Wall Stree Journal report that beginning in 2018, SiriusXM will pay 15.5% of gross revenue through 2022. The rates for these types of compulsory, government-issued licenses that radio-type services rely on for music are decided every five years.

Recording Industry Association of America Chief Executive Cary Sherman called the decision “an important move in the right direction” but said “rates will remain short of what music creators actually deserve.”

“For more than a decade, SiriusXM pocketed billions of dollars on the backs of music creators by paying below-market rates while the company crowed about record profits and boasted a market cap about the size of the entire recorded music market,” said Mr. Sherman in a statement.

SiriusXM currently pays 11% of its revenue to SoundExchange Inc., which collects digital performance royalties on behalf of record companies and artists. SoundExchange then distributes that payout to artists and labels based on how often their music is played. By law, half goes to the copyright owner—usually a record label—and half goes to the performer of a song.

SoundExchange had proposed the new rate for Sirius either be more than doubled to 23% of revenue or be $2.48 per subscriber a month in 2018 with moderate annual increases—whichever is greater.

SiriusXM had more than 32 million subscribers at the end of the third quarter. About five million of those get the service free as part of a promotion like those car companies frequently offer. It reported $5 billion in revenue last year.

Meanwhile, the Copyright Royalty Board lowered the rate paid for cable and satellite TV music services provided by Music Choice and Muzak. These “preexisting subscription services,” which currently shell out 8.5% of gross revenue, will pay 7.5% for the next five years.