SoundExchange has filed its second suit over improper royalty filings since its founding 12 years ago.
The suit, filed in D.C. District Court on April 1, centers around the Austin, Tx.-based Mood Media Corporation, owner of Muzak since 2011, which was an early entrant into the digital streaming market. Because Muzak began offering its streaming service to Dish Network satellite television subscribers before the establishment of the Digital Millennium Copyright Act in 1998 -- which set higher statutory rates on digital streams -- it was allowed to have its pre-existing, lower royalty rate of 8.5 percent of revenue grandfathered in. By comparison, the 2015 rate for new subscription services is 15% of revenue or 1.4 cents per subscriber a month -- whichever is greater.
SoundExchange contends in its suit that Muzak's status as a "pre-existing subscription service" (or PSS, a Congressional term for the three services which weren't made to adhere to the post-DMCA rates) does not extend to the company's expansion from Dish onto other platforms, such as DirecTV's SonicTap offering. SoundExchange alleges that Muzak began improperly filing payments under the 8.5% rate in May of 2014.