US collecting society BMI has begun action in the American courts in a royalty rate dispute with satellite radio company Sirius XM, saying that despite two years of “good faith” negotiations, Sirius insists on “underpaying the creators of the music that drives the majority of its business”.
Responding to that news, David Israelite, CEO of the US National Music Publishers Association, says, “record labels and artists receive from digital radio significantly more than songwriters on a model that has historically valued them equally. Labels and artists are not paid too much. Songwriters and publishers are not paid enough. That’s why for years we have called to lessen the ‘digital radio divide’”.
At the core of the dispute is the evolution of the services offered by Sirius and the scale at which it operates, all of which - BMI believes - justifies a change to what the broadcaster pays for use of its member’s songs.
BMI boss Mike O’Neill explains, “SiriusXM’s proposal is a clear attempt to rely on a rate that was established when the company was very different in terms of its size, reach, degree of digital focus and revenue growth, and falls well below what is in the best interests” of BMI-allied songwriters and music publishers.
“We will continue to fight for fair and appropriate rates when we believe the music created by our songwriters and composers is being significantly undervalued”, he adds.
Because of the way BMI is regulated, disputes with licensees over royalty rates are taken to a special rate court, where both sides argue their case and a judge decides what is appropriate. The 2018 Music Modernization Act in the US made some changes to the way the rate courts manage these cases which could have an impact on this dispute.
In particular, the rate court can now consider what a licensee is paying to record labels and artists on the recordings side when assessing what a fair rate should be for writers and publishers. Unlike AM/FM radio in the US, which pay no royalties to labels and artists, satellite and digital radio stations are obliged to pay into the record industry, although they can rely on a compulsory licence administered by SoundExchange which sets industry-standard rates.
Which is why NMPA boss David Israelite hones in on the disparity between what artists and labels earn from satellite radio, and what songwriters and publishers are paid. He adds that he’s “extremely pleased that BMI has taken the largest satellite radio company in the world to court to demand what’s fair. Companies like SiriusXM have massive profit margins fueled by music creators. We fully support BMI in their fight for the value of songs”.
The Sirius legal team is already dealing with some disputes with the music industry. It is currently fighting a lawsuit filed by SoundExchange, while Sirius-owned Pandora has been sued by mechanical rights collecting society The MLC.