In a rate proposal presented to the Copyright Royalty board recently, SoundExchange — the agency responsible for collecting statutory royalties from digital broadcasters like Pandora — is seeking to more than double the royalty payments it receives from SiriusXM.
SoundExchange has proposed that Sirius pay whichever bucket of revenue is greater, $2.28 per subscriber in 2018 (which would rise to $2.79 per subscriber in 2022) or 23 percent of gross revenue.
Currently, Sirius pays a statutory rate of 10.5 percent of revenue, and will pay 11 percent of revenue next year. As part of its fee setting, Sirius assigns an average per subscriber royalty rate and passes that amount onto subscribers as part of its monthly subscription rate.
SoundExchange previously tried to get royalties paid out of two buckets for webcasting rates, but last year the CRB turned down that request and set a single bucket of $0.0017 per stream for ad-supported services and $0.0022 per stream for paid subscription services.
With a proposal that Sirius pay 23 percent of gross revenue for master recording ephemeral reproduction and performance royalties, that’s approaching almost 50 percent of the revenue it derives from its music-related stations. (According to one of Sound Exchange own experts, an opinion included in the agency’s proposal, sound recordings account for at least 50 percent of Sirius XM’s total value to consumers.)
Since Sirius currently direct about 3 percent of revenue towards publishing performance royalties, the service’s total payout stands at about 26 percent of revenue — if the CRB agrees with Sound Exchange’s viewpoint — which is nearly double the 13-14 percent of revenue in total music royalties that Sirius is estimated to pay out currently.
In backing up its requested rate to the CRB, SoundExchange’s documentation notes its proposal would allow Sirius to remain very profitable, saying the company has 30 million subscribers and generated a net income of $510 million on $4.57 billion in revenue for for the fiscal year 2015.