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Latest
SoundExchange Files Motion to Dismiss SiriusXM’s Complaint
May 8thSoundExchange yesterday moved to dismiss SiriusXM’s allegations that it is “unlawfully interfering” in the satellite radio company’s efforts to secure copyrights through a competitive market. SoundExchange did nothing improper and we find it ironic that these “antitrust” charges are coming from a company which enjoys its status as North America’s only satellite radio provider. SiriusXM’s claims are entirely false and the litigation is simply an impermissible tactic to derail the rate-setting proceeding that is now underway. We view this as nothing more than an attempt by SiriusXM to pay less for the music at the core of its service, even as its revenues soar.
As we explain in our motion to dismiss, we believe the complaint should be tossed out of court for at least the following reasons:
1.SiriusXM sued SoundExchange due to its role in helping record labels collectively negotiate the statutory license — the very activity that Congress specifically encouraged. When it created the statutory license for licensing digital music performances, Congress provided copyright owners the ability to work together in rate negotiations for the use of their digital performances. This ability made good policy sense; otherwise the parties would have difficulty making the license work properly. Congress also decided that if the copyright owners and services didn’t reach agreement, copyright owners would not have the right to walk away as they would with traditional negotiations. Instead the rates would be set by the Copyright Royalty Board (CRB). Sirius XM is trying to prevent SoundExchange from engaging in even the most basic efforts to help educate the copyright owners and artists whose rights are at stake. In other words, Sirius XM wants the benefits of the rate court (access to all commercially released sound recordings at a low government rate), while simultaneously trying to prevent copyright owners from exercising their right to coordinate in rate court proceedings and negotiations, or even to learn about the basic facts of the case.
2.SiriusXM is complaining about rates set by the government, not by SoundExchange. While we advocate for higher rates on behalf of our members and ensure they are informed about their rights, it’s ultimately the CRB that sets the statutory rates. While SiriusXM claims that it was “harmed” by having to pay a government rate for the use of content, nothing could be further from the truth. The CRB does its due diligence to ensure the government rates meet a “fair” and “reasonable” standard. In fact, in the past the rates for the musical content from which SiriusXM benefits have actually been artificially low. The idea that SiriusXM “has been forced to deal exclusively with SoundExchange to acquire statutory licenses at higher prices” is not only absurd, it’s completely contrary to the statutory process that has helped its business thrive.
3.Sirius XM’s suggestion that SoundExchange has any ability to “choke out competition” is outrageous. SoundExchange has an obligation to the artists and labels it represents to advocate on their behalf and inform them about rate-setting proceedings in which the CRB determines the value of their recordings. SiriusXM, on the other hand, is telling record labels to take its offers – at a significantly lower rate – or risk decreased airplay of their content. SirusXM, the only satellite radio provider entrusted to use the public airwaves for its own commercial benefit, is threatening to alter its programming based upon which labels take its offer. We have to question: who is really leveraging its market power here at the expense of the record labels?
4.Simple economics drove so many record labels to turn down Sirius XM’s direct licensing offers. SiriusXM’s entire complaint depends on the notion that some record labels rejected it offers because of “pressure tactics,” but the complaint itself makes clear why many labels did just that. SiriusXM was offering the record labels a rate that was lower than the already low rate set by the CRB, and yet SiriusXM expected to receive even more rights to their sound recordings in return. In other words, they were demanding more rights for less money. The fact that so many record labels turned down this deal is hardly surprising. It’s a matter of simple economics – not a conspiracy.
SoundExchange is proud of its efforts in supporting the creative community. We have every right to advocate for and educate the constituents we serve who put their heart and soul into the music they create. We are prepared for this challenge against Sirius XM – a multi-billion-dollar business built on the backs of the recording artists and record labels that make its very existence possible. We remain committed to our mission of protecting the long-term value of music, and ensuring that recording artists and record labels continue to receive the compensation they deserve.
The full Motion to Dismiss can be found here.
View SoundExchange’s October 2011 and August 2011 statements regarding the satellite royalty proceedings.
