Photo Credit: SoundExchange
Over seven years ago, SoundExchange sued Music Choice for allegedly failing to pay millions in due royalties (and late fees) on its “Music Choice for Business” service. Now, following a lengthy pause and plenty of back and forth, the marathon legal battle is resuming.
SoundExchange fired off the original suit, centering on alleged underpayments between 2013’s start and 2016’s end, in April 2019. And as that filing date’s eight-year anniversary is only months away, a quick refresher is in order.
The way the plaintiff tells the story, a Prager Metis audit, itself having spanned multiple years as Music Choice purportedly refused to provide “access to any information pertaining to its activities in 2013,” determined that the defendant had “systematically underpaid statutory royalties” on the above-noted business subscription.
Retreading the alleged underpayments’ convoluted specifics or the intricacies of the parties’ respective positions would require considerable ink and wouldn’t make for a very engaging read.
The short version is that a multifaceted disagreement erupted concerning the precise definition of “gross proceeds” in the relevant statutory text. Per SoundExchange, the DSP wrongfully omitted business-offering revenue (a percentage of which is owed for the license) tied to channels and recordings that were likewise provided under the non-business subscription.
In brief, Music Choice allegedly “hid from SoundExchange the vast majority of the fees and payments it actually received from the provision of its” business tier.
Fast forward to December 2021, when the presiding judge referred the case to the Copyright Royalty Board (CRB) for clarification, and then to December 2024, when the CRB largely agreed with SoundExchange in a voluminous ruling.
(Among other things, SoundExchange had argued that Music Choice’s interpretation would allow for a large number of non-royalty-bearing usages when the recordings were added to the business and general subscriptions alike.)
Music Choice quickly appealed, and the appropriate court this past August kicked the case back to the district court on jurisdictional grounds.
With almost 14 years having passed since the audit period’s start, both sides just recently moved to lift the CRB-prompted stay.
“At this point, the Parties believe it would be beneficial to conduct discovery in phases to facilitate potential settlement discussions,” Music Choice and SoundExchange wrote, proceeding to propose “an approximately 75-day period of damages discovery culminating in settlement discussions or mediation.”
Running with the corresponding suggested schedule, the litigants would have until early March to wrap the settlement talks or mediation. Time will tell whether the stretch delivers a resolution, though quite a lot has changed since the plodding dispute began.
Most importantly, it’s unclear whether SoundExchange even has the authority to sue for allegedly missing royalties.
15 months ago, in the SoundExchange v. SiriusXM royalties clash, a federal judge granted the satellite radio giant’s dismissal motion, concurring that the non-profit “has no private right of action under” the appropriate Copyright Act statute.
Now, with other royalties actions on ice, an all-important appeal is underway, we broke down last month.
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