Tuesday, March 13, 2007

Royalties

Most everyone here has heard that Sirius and XM is in a battle with the RIAA (SoundExchange) over royalties, but did you know that XM and Sirius are engaged in three preceedings before the Copyright Royal Board Tribunal for royalty rate determination?

First, XM and Sirius are before the CRB to determine the royalties due for satellite digital audio services (SDARS), better know as satellite radio. Everyone has heard of this one. Sirius and XM are proposing a royalty rate of 0.88% of revenue. The RIAA wants a little more, starting at 10% of revenue and reaching 23% the final year. It is an interesting argument that they make. They arrive at their rate based on the rate of return Sirius expected by hiring Stern, which has little bearing on music. We will discuss that at another time.

The second proceeding is about the royalty rates for satellite radio over satellite TV. Here, Sirius is proposing a rate of $0.001235 per subscriber per month. The RIAA proposes $0.25 per subscriber per month. Sirius and XM are joined by MTV on this one.

The third proceeding is over royalty rates for business establishments. This is just getting underway and the proposed rates are not known. XM and Sirius are joined by Muzak and Music Choice on this one.

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