SoundExchange, a nonprofit collecting digital performance royalties, is appealing a U.S. District Court ruling from August 2025 that dismissed its $400 million lawsuit against SiriusXM for allegedly unpaid royalties.
The lawsuit, filed in 2023, accused SiriusXM of underpaying by manipulating revenue allocations in bundled subscriptions. The court ruled SoundExchange lacks authority to sue in federal court under the Copyright Act, prompting its appeal to the Second Circuit on September 5, 2025. The outcome could limit SoundExchange’s enforcement powers, affect $1.4 billion in annual royalty distributions, and influence similar cases (e.g., Sonos).
The ongoing dispute with SiriusXM, the leading U.S. satellite radio and streaming service, stems from allegations of royalty underpayment dating back several years. In August 2023, SoundExchange filed a lawsuit in the U.S. District Court for the Eastern District of Virginia, accusing SiriusXM of "gaming the system" by manipulating revenue allocations in its bundled subscription packages. Specifically, SoundExchange claimed that SiriusXM inflated the value attributed to its webcasting (internet streaming) component— which has lower royalty rates under CRB rules—and subtracted that from the satellite radio revenue pool, which requires higher royalty payments (typically 15-20% of gross revenue).
The case took a dramatic turn in October 2024 when SiriusXM filed a motion to dismiss, arguing that SoundExchange lacks statutory authority under Section 114 to bring federal lawsuits for royalty disputes. On August 8, 2025, U.S. District Judge Naomi Reice Buchwald agreed, issuing a 33-page opinion dismissing the entire case.