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US judge declines to set aside Slacker ruling ordering it to pay $9.7 million to SoundExchange

By | Published on Monday 21 November 2022

Slacker Radio

A US judge has declined to set aside his recent ruling against personalised radio service Slacker and its parent company LiveOne regarding royalties that are owed to record industry collecting society SoundExchange. The judge says that the court is simply enforcing an agreement signed up to by LiveOne execs back in 2020 and his judgement is therefore “fair, adequate and reasonable”.

Personalised radio services in the US – like Slacker, which was bought by the company now known as LiveOne in 2017 – can rely on a so called compulsory licence when it comes to accessing recorded music to stream, meaning they don’t have to negotiate deals with individual record labels. SoundExchange manages that compulsory licence.

But they do need to pay royalties to the society under the terms of the compulsory licence. And, SoundExchange argued in a lawsuit filed with the courts in June, Slacker stopped paying those royalties back in 2017 following the LiveOne acquisition.

Once the royalty dispute was in court, SoundExchange presented an agreement that had been signed by execs at Slacker in 2020 which said that a judge should enter a judgment against the company for the full sum owing to the collecting society if the digital firm defaulted on a repayment plan that had just been agreed. Which it then did.

With that in mind, the judge quickly ruled in SoundExchange’s favour, ordering Slacker and LiveOne to hand over $9.7 million in unpaid royalties to the collecting society.

LiveOne then returned to court arguing that it was simply unrealistic to expect it to hand over nearly $10 million to SoundExchange in one go, and that new talks should begin to agree a payment plan. Enforcing the court order, it added, would cause “unsustainable economic damage” to the LiveOne business, not least because it had already had a negative impact on the company’s loan agreements.

SoundExchange insisted that the judgement should stay in place, basically arguing that – after five years of back and forth with LiveOne – now is not the time to be opening a new set of negotiations.

The judge overseeing the case agrees. He said in a new ruling last week: “Defendants cannot argue that the judgment is a result of ‘excusable neglect’ or that it is ‘without fault’, when the judgment was entered pursuant to stipulation that defendants negotiated for and assented to”.

With that in mind, LiveOne’s motion to have the earlier ruling set aside was denied.