The “U.S. Music Royalty Fee” SiriusXM tacks onto its monthly subscription price is the flashpoint for a lawsuit brought against the company by a pair of California attorneys. Ayana Stevenson and David Ambrose claim the satellite broadcaster has engaged in “a deceptive pricing scheme whereby SiriusXM falsely advertises its music plans at lower prices than it actually charges” by not including the amount of the U.S. Music Royalty Fee in its advertised prices. According to the complaint, this increases the true plan price by 21.4% above and beyond the advertised price for the plan.
Originally filed in Contra Costa County Superior Court on April 14, SiriusXM entered a motion to move the case to U.S. District Court in San Francisco.
The suit seeks class action status to represent all current and former SiriusXM subscribers in California who paid a U.S. Music Royalty Fee within the applicable statute of limitations.
Seeking a trial by jury, the suit claims this practice violates California’s Civil Code and Business & Professional Code and breaches the implied covenant of good faith and fair dealing.
According to the complaint, the proposed class of current and former California subscribers numbers at least 3.8 million members. Doing the math, the plaintiffs estimate that the fee at issue “accounts for over $160 million in annual charges to California subscribers” and that since 2009, Sirius XM “has unlawfully extracted over $1 billion from California consumers.”
As the Copyright Royalty Board has hiked its rate covering the performance of sound recordings delivered over satellite, SiriusXM has passed at least part of the increase along to its subscribers. In 2017 the CRB hiked the satcaster’s performance royalty rate by 41% for the period from Jan. 1, 2018 through Dec. 31, 2022.
More recently, SiriusXM said in February that it would raise the price of its satellite and streaming radio packages in March, a move that will also impact the cost of the company’s music royalty fee that is passed along to subscribers.
Not only does the satcaster intentionally not disclose the royalty fee, it also doesn’t mention the words “U.S. Music Royalty Fee” in any of its advertising, including in the fine print, per the complaint. “SiriusXM’s sole advertising disclaimer is that ‘Fees and taxes apply’—but in reality zero taxes and zero other fees apply, such that the undisclosed U.S. Music Royalty Fee is in fact the sole and exclusive component of ‘Fees and Taxes,’” the suit contends.
In addition, the complaint says that once the company lures a new subscriber, it never sends customers ongoing bills or payment receipts, while automatically renewing their subscriptions month after month.
The complaint goes as far as making the claim that the company’s “U.S. Music Royalty Fee scheme” has been the source of all of SiriusXM’s profits for the past several years.
The plaintiffs are seeking relief to “protect the general public by putting an end to SiriusXM’s unlawful advertising scheme.” They also want the court to declare these practices unlawful under California law. And to require the satcaster to hand over any profits it made as a result of this practice or to pay damages to the Plaintiffs and Class members “in the amount of their overpayments.” It is also seeking a court order for SiriusXM to include the amount of the U.S. Music Royalty Fee in the music plan prices it advertises to the general public.