SiriusXM Says There’s ‘Nothing Misleading’ About Royalty Fee That Sparked Class Action Lawsuit

SiriusXM wants a federal judge to dismiss a class action claiming the company earns billions by foisting a deceptive “royalty fee” on subscribers, arguing there’s “nothing misleading” about its pricing.

The lawsuit, filed in federal court last year, claims that SiriusXM adds a huge “U.S. Music Royalty Fee” onto the advertised price — an “invented” charge with a deceptive name designed to falsely make consumers think that it’s mandated by the government to pay for music rights.

But in a Monday response, attorneys for the satcaster argue that the company “prominently and repeatedly” discloses all fees that consumers face before they purchase their subscription, including a base price and “taxes and fees.”

“There is nothing misleading about Sirius XM’s practices,” the company’s attorneys say. “Every piece of information which plaintiffs say Sirius XM attempted to ‘conceal’ is and has always been out in the open. Plaintiffs were told what they had to pay if they wanted their music plans, and they received what they paid for—as contemplated by every statement exchanged between Sirius XM and its customers.”

The case, filed in June by four aggrieved SiriusXM customers who say they want to represent millions of other subscribers, claims that the Royalty Fee amounts to 21.4% of the original price – netting the company a whopping $1.36 billion in 2023 alone. The accusers say the fee itself is not illegal, but that it needs to be clearly advertised and explained to potential buyers.

“This action challenges a deceptive pricing scheme whereby SiriusXM falsely advertises its music plans at lower prices than it actually charges,” attorneys for plaintiffs wrote at the time. “SiriusXM intentionally does not disclose the fee to its subscribers. SiriusXM even goes so far as to not mention the words ‘U.S. Music Royalty Fee’ in any of its advertising, including in the fine print.”

The name of the fee aims to make it sound important and official, the lawsuit claimed, but it’s really just a “disguised double charge for the music plan itself” that no other competing music services imposes on their users as an additional fee on top of the actual price.

“Reasonable consumers would expect that the advertised price for SiriusXM’s music plans would include the fundamental costs of obtaining the permissions necessary to provide the music content that SiriusXM has promised is included in those plans,” lawyers for the subscribers wrote in their complaint.

But in Monday’s response, Sirius said there was nothing misleading about the name of the fee, which they say “offsets royalties payable to holders of copyrights in sound records and holders of copyrights in musical compositions.”

“Sirius XM has done exactly what it said it would do: charge a monthly price for music subscriptions, plus ‘fees and taxes,’ for a prominently and repeatedly disclosed total price that is the sum of the two,” the company wrote. “And the fee Sirius XM charges is exactly what its name suggests: one to cover the royalty expenses.”

Attorneys for the plaintiffs will file a response in the weeks ahead, and then a judge will rule on SiriusXM’s motion at some point in the next few months. If denied, the case will proceed toward an eventual trial.