XM, Sirius unite in music rights challege

XM, Sirius in sync on claim

NEW YORK — In a rare moment of solidarity, XM Satellite Radio and Sirius Satellite Radio challenged a claim Wednesday by SoundExchange that they should pay more for music rights.

A deal between the satcasters and the nonprofit org that licenses music for digital transmission is set to expire at the end of the year, and the company was quoted in the Washington Post as saying it expects a steep increase to renew the deal.

The report delivered a hit to the stock of both radio satcasters: XM was down 7%, while Sirius slipped 2.6% in Wednesday trading.

In response, XM and Sirius released a joint statement claiming they already pay fair market value for the artists’ song rights, adding that terrestrial radio pays a fraction of what satellite pays for its music rights.

“Consumers, artists and the recording industry all benefit from satellite radio’s multibillion-dollar investment in a dynamic new promotional platform for music,” said the statement. “Under our fair proposal, we will continue to pay significant compensation to artists and their record companies.”

SoundExchange is a nonprofit set up to collect digital royalties for the record labels for transmission on cable, satellite or over the Internet. It represents all U.S.-based music majors, Warner Music Group, Universal Music Group and Sony BMG.

Talks on a new deal will be adjudicated by the U.S. Copyright Office, which will ultimately set the new rate.

Under the satcasters’ current deal, they pay 6.5%-7% of their subscription revenues in exchange for the right to license songs. SoundExchange has proposed that its new deal start at 10% and increase to 23% after six years.

SoundExchange said the current deal was negotiated to help both satcasters get off the ground; now it wants fair market value for the music.

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