Posted by chicagomedia.org on June 16, 2009 at 16:27:36:
It's Official: Sirius XM Passing Royalty Fees On To Subscribers
June 16, 2009 | FMQB
Earlier this month, it was reported that Sirius XM Radio would be adding new fees to its subscription prices, as a way to pass along increases in satellite radio royalty fees to the consumer. Now the satcaster has confirmed this news, in an letter to its subscribers.
The letter, signed by Sirius XM Chief Service Officer Joe Zarella, reads as follows:
"Thank you for being an XM subscriber. We are dedicated to providing our subscribers with the best programming and listener experience available on radio today. As part of this commitment, we have an important update regarding your XM subscription.
Music royalty rights were established by the U.S. Congress as part of the Copyright Act. This Act requires payment of copyright music royalties to recording artists, musicians and recording companies who hold copyrights in sound recordings.
These royalties have recently increased dramatically, principally as a result of a decision made by the Copyright Royalty Board, which is designated by the Library of Congress to set royalty rates for sound recordings. Beginning on July 29, 2009, a 'U.S. Music Royalty Fee' of $1.98/month* for primary subscriptions and $.97/month* for multi-receiver subscriptions will be effective upon your next renewal. This fee will be used directly to offset increased payments from XM to the recording industry.
Unfortunately, we cannot control the Copyright Royalty Board's rate increase, but we can offer you ways to save on your subscription. The longer your subscription, the more you save!"
As a reaction to the additional fees, Sirius XM is offering a free month for subscribers who sign up for one year, with five free months for a two year deal and nine free months for a three year subscription.
Orbitcast reported earlier this month that Sirius XM "can no longer absorb these increased costs" in performance royalties. In 2007, the Copyright Royalty Board instituted increased performance royalty rates for satellite radio, which have gone up every year and will continue to increase into 2012. The rate increased from six percent of gross revenue in '07 and '08 to 6.5 percent this year. It will reach seven percent in 2010, 7.5 percent in 2011 and eight percent in 2012.
As part of the Sirius and XM merger, the FCC allowed the combined satcaster to pass along the royalty fees, effective July 29, 2009, whereas the company was required to absorb the fees itself before this date.