SoundExchange, the U.S. government-designated royalty collection and distribution agency for streaming music royalties, has sued AccuRadio, the Chicago-based streaming music platform.
Michael Huppe, CEO of SoundExchange, today accused AccuRadio of “refusing to pay royalties for the use of protected recordings.” Huppe’s remarks are included in a widely distributed press release.
Accuradio’s response comes in a press announcement voiced by Founder and CEO Kurt Hanson. “SoundExchange’s (SX) lawsuit against AccuRadio comes as a complete surprise to us, as we have been working with SX negotiating a fair and reasonable payment plan for several months now, in what we believed was good faith from both parties,” Hanson asserted.
SoundExchange claims that AccuRadio’s royalty payments became inconsistent in 2016, and ceased in 2018. Negotiations have proceeded since then. “SoundExchange has been in negotiations with AccuRadio since that time to resolve their outstanding balance, but AccuRadio has failed to meet the terms to which the parties agreed,” the announcement reads.
AccuRadio puts forward a different history, again from Kurt Hanson: “Rather than ‘refusing to pay royalties,’ as SX’s press release states, in fact AccuRadio has been a consistently reliable SX licensee for the vast majority of the past 20+ years, having paid SX over $12,500,000 in royalties to date. SX’s implication that AccuRadio hasn’t paid royalties since 2018 is erroneous and fails to note that AccuRadio resumed full payments in early 2021 and continued until very recently.”
AccuRadio’s press release also contains some industry advocacy, arguing that sound recording royalties for online radio “wildly higher” than for other types of radio, observing that AM/FM over-the-air music use has no royalty obligation at all.
Resolution of the argument appears to be top-of-mind or AccuRadio. “We intend to continue to work with SX,” Hanson stated, “either directly or via a judge, to enter into a fair and reasonable payment plan for past obligations and to resume current-period payments ASAP.”
Full Press Statements
AccuRadio
“SoundExchange’s (SX) lawsuit against AccuRadio comes as a complete surprise to us, as we have been working with SX negotiating a fair and reasonable payment plan for several months now, in what we believed was good faith from both parties,” notes AccuRadio Founder/CEO Kurt Hanson. “In fact, we thought our latest proposal was being vetted by SX and would be adopted by the parties with few modifications.”
Hanson continued, “Rather than ‘refusing to pay royalties,’ as SX’s press release states, in fact AccuRadio has been a consistently reliable SX licensee for the vast majority of the past 20+ years, having paid SX over $12,500,000 in royalties to date. SX’s implication that AccuRadio hasn’t paid royalties since 2018 is erroneous and fails to note that AccuRadio resumed full payments in early 2021 and continued until very recently.”
The core problem for AccuRadio and for many other music services, Hanson notes, “is that sound recording royalty rates for music played on online radio are wildly higher than they are for other forms of radio — or for other forms of royalties such as songwriters’ royalties.”
“AM/FM stations pay no sound recording royalties for terrestrial broadcasts, and satellite radio is rumored to pay a royalty of about 15% of revenue,” Hanson continues, “yet AccuRadio’s SX royalty obligation in some months has worked out to be as high as 45% to 78% of its revenues.”
Hanson further notes that the high music streaming royalty rates are particularly challenging for smaller and independent webcasters like AccuRadio that don’t have deep pockets or multinational corporate parents.
Hanson concludes by saying that “At AccuRadio, we love the medium of online radio – with its ease- of-use, incredible variety, personalization features, and reasonable spot load – and we intend to continue to work with SX, either directly or via a judge, to enter into a fair and reasonable payment plan for past obligations and to resume current-period payments ASAP.”
SoundExchange
WASHINGTON, July 22, 2024 /PRNewswire/ — SoundExchange, the premier music tech organization powering the future of music, today announced the non-profit company filed suit on July 19 in the United States District Court for the Northern District of Illinois against AccuRadio, Inc. to recover unpaid royalties owed to performers and rights owners.
“AccuRadio has directly harmed creators over the years by refusing to pay royalties for the use of protected recordings,” said Michael Huppe, president and CEO of SoundExchange. “Today, SoundExchange is standing up for creators through this lawsuit to protect the value of music and ensure creators are compensated fairly for their work. We hope AccuRadio will immediately reverse course and pay what they owe for the use of the music that sits at the foundation of its service.”
Background
SoundExchange is the sole entity in the United States designated by the Library of Congress to administer the statutory license specified in Section 114 of the Copyright Act, collect digital performance royalties from licensees, and distribute those royalties to performing artists and copyright owners.
AccuRadio is a “customizable Internet radio service” that uses the statutory license for the use of sound recordings.
Until 2016, AccuRadio paid statutory royalties for recordings it was using. That changed in 2016, when its payments slowed and finally stopped in 2018. SoundExchange has been in negotiations with AccuRadio since that time to resolve their outstanding balance, but AccuRadio has failed to meet the terms to which the parties agreed. SoundExchange is now filing a complaint to recover the royalties AccuRadio owes.