Sirius XM Passing Music Royalty Rates On To Subscribers, Raising Lots Of Questions
from the disparity dept
Beginning at the end of July, Sirius XM satellite radio subscribers will see an extra charge of about $2 per month on their bill, as the company will begin passing along the music royalty rates it must pay to subscribers. We've written a lot about music royalties and licenses, particularly about how they serve to stifle the very innovation the music industry needs to survive, in favor of upfront demands for cash -- money which seems to have a hard time making its way to artists. This news from Sirius XM not only is likely to raise the hackles of its subscribers, but also raises some questions about the royalty system, and how it affects consumers.First, the royalty rate for Sirius XM was set by the CRB at 6.5% of gross revenues for 2009, increasing by half a percent per year over the following three years. So why, then, is Sirius XM charging a $1.98 fee -- or 15.2% -- on its $12.95 monthly subscription fee? That seems like much more than "passing along" the royalty rate. As part of the governmental approval for the merger of Sirius and XM, certain conditions were placed on the company, including a three-year price freeze. The company has gotten around this before by separating out services, like online listening, that used to be included in the general subscription fee, then requiring an additional charge for them. Now it looks to be getting a boost by "recovering" a significantly higher percentage of its subscription fees than it must pay out in royalties. The FCC's merger conditions allow the company to pass the royalty fee on to consumers -- but why would they let the company pass on a fee almost three times as high as the actual royalty rate? Mobile phone companies have used similar "fees" to pad their revenues for some time, and the FCC apparently doesn't mind that, either.
Second, and perhaps more importantly, this situation highlights the disparity in how the music royalty rates are applied. Terrestrial radio broadcasters, unlike satellite broadcasters, don't have to pay musicians (or, rather, their labels) royalties. Satellite radio was presumably, an easier target for the likes of the RIAA, given its relative lack of lobbying strength, so the industry cartel defined it as an "interactive" service -- industry-speak for "pay us more money." It's hard to see how satellite radio is really any different than terrestrial radio, except for a different business model, albeit one with the same end, so it's also hard to understand why the two should be treated differently from a royalty perspective. The RIAA and its cronies have been working to change this -- by trying to force terrestrial broadcasters to pay up as well. They call radio "a kind of piracy", again ignoring the fact that radio, whether it's satellite or terrestrial, promotes their products. The National Association of Broadcasters, which represents traditional broadcasters, likely doesn't really mind the fact that Sirius XM has to pay royalties, given its well-documented disdain for the company. But by standing idly by while Sirius XM gets hit with the royalty mandate, it weakens its own argument against its members having to pay royalties. The equitable solution here isn't really to force terrestrial broadcasters to pay up, to level the proverbial playing field. It's to eliminate the royalties that are hamstringing new services and promoting music. Sooner or later, the industry will figure this out -- but at this point, it looks like that realization will come only after it's run itself into the ground.
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Filed Under: price increase, satellite radio, subscriptions
Companies: sirius xm
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I tried XM for a year
Really don't see a reason for satellite radio esp for the price.
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Re: I tried XM for a year
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up up up and up
If this keeps up I will probably cancel my sirius subscription seeing as how pretty much anything I want I can download for free using any number of bittorrent sites and just throw it on the ol ipod.
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Separate line item
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Sirius XM Passing Music Royalty Rates On To Subscribers, Raising Lots Of Questions
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Re:
But let's face it: when moving, XM is a low priority. Eventually, you may find a XM reciever and be surprised that it still works and gets all the channels, even though you canceled it a while ago.
A few threads about this phenomenon exist on the interwebs and it seems XM only sends the "deauthorize packet" during the first few weeks, at a point they eventually stop. So long as it's securely packed in a box, it seems it can't get the deauth packet. (Cardboard does that)
So, point is, it looks like I've been blessed with Free XM for a few years now, and occasionally whenever I move, I tune in for a few moments to see if it works, and more importantly, if things changed and I want to set it up, and resume actually paying for service.
Usually this exercise lasts about an hour, which ultimately leads to me packing it back up in another box (with bubblewrap), a facepalm, and remembering with crystal digital clarity why I always was happy to arrive where I needed to be when I had brought 28 CDs during cross country drives.
If your're like me, you probably clocked in a few hundred hours of actual listening time between the two receivers you had, and remain baffled that they think the service is worth paying for. If one day the service stopped working, I still wouldn't pay for it.
It's great American Technology, but the content and playlists, quite honestly, fully and completely, unequivocally sucks.
I suppose the point is, that I still won't use it if it was free.
Netflix has a different business model, and keeps tempting me, via the occasional emails begging me to come back, and each time, I sirius, I meant, seriously think about it.
Anyways, we're about to tee up. Gotta run.
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Waiting to subscribe until...
Sirius/XM is not only going to loose subscribers by overcharging (again), but potential new subs will not pay the too high cost.
Free over the air radio isn't compelling to me either. HD radio is a gimmick.
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So have I paid the royalty?
I'm sure this idea is too simple for an RIAA lawyer to understand, but I thought it was one worth pointing out.
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Exactly Ian, exactly
But this is getting ridiculous. Sound quality is up and down, but generally it's gotten worse as they've packed more channels in. It really depends on the channel though - different channels get different levels of compression depending on the popularity.
But these price increases. It was stable and a "good value" for several years but in the past year they just keep jacking up those rates. They never should have been allowed to merge with Sirius - as soon as they did, the prices started increasing and previously free features (internet streaming) now have a monthly fee. 4 years ago there weren't other options for mobile streaming audio. Today, anyone with an iPhone and Pandora has an anti-XM solution already - with no additional costs other than the monthly data charge they're already paying.
I'm pretty much done with XM if they hit me with another rate increase. It's marginal as it is now. Everyone is looking at how to save a few bucks these days. XM doesn't understand that it's going to be one of the first things that customers chop when looking to trim a budget. It's low-hanging-fruit. It's a luxury that many people can do without and can easily get rid of and replace with other music solutions. And that's exactly what they're going to do as these rates continue to increase.
XM's costs are fixed. The birds are in the air, and it costs the same to them whether they're broadcasting to 1 person or 100,000,000. They need to lower their rates and aggressively push for new customers, with new and exciting hardware. That's the only way they're going to be profitable. Squeezing their existing customers will be a failure.
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Re: Exactly Ian, exactly
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Re: Re: Exactly Ian, exactly
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Re: Re: Exactly Ian, exactly
Sirius quality has gone down the bowl,the sound quality sucks!
Why pay for less?
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Royalities
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Still paying for Ophrah and Howerd Stern
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Sirus/XM
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I absolutely will blame SXM for this...
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SIRI 'investors'
Let that sink into your head
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Re: SIRI 'investors'
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Sirus/XM
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After asking 4 TIMES point blank if my bill was going to change (they kept saying NO), I said "Alright, i guess the information was incorrect, I heard it would be going up $1.98... well, thank you and goodbye".
Then I get "Oh... Yes, the $1.98, thats not a fee increase, its from the Music --Blah blah blah--, so its not technically a price increase."
ME: "So, can I not pay it and continue to listen to my service?", "Nope", "Ok, thats a price increase, now cancel it"
:: Connected to Supervisor ::
where I am told, there has been no decision yet to charge the $1.98 and if we do decide, you will be informed.
Left it like that and decided to not cancel my subscription (maybe they will rethink their policy on this matter).
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Cancelled Sirius 5 mos ago...
BTW, I also don't watch cable TV anymore. All the TV is online now. On the odd occasions when I actually watch a commercial on a friend's TV, I actually am surprised most of the time because I am not connected to the Madison Ave. zeitgeist anymore.
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Re: Cancelled Sirius 5 mos ago...
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Additional Fees & Charges: Prices do not reflect applicable taxes, fees and charges.
isn't the monthly fee a "charge"...
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Idea
When you go in the car, simply playback an mp3 and you'll have hours of music to enjoy with no subscription.
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early adopter
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"passing along" the royalty rate or not
How does that reconcile with what you have written above?
"First, the royalty rate for Sirius XM was set by the CRB at 6.5% of gross revenues for 2009, increasing by half a percent per year over the following three years. So why, then, is Sirius XM charging a $1.98 fee -- or 15.2% -- on its $12.95 monthly subscription fee? That seems like much more than "passing along" the royalty rate."
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Re: "passing along" the royalty rate or not
It would seem that the single-receiver subscribers are subsidizing costs of the multi-receiver people. If that's the case, its hardly an incentive to upgrade.
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Quality down. Fee up
Although I do hope they survive. I'm hooked on MLB and Classic Radio.
I find that the quality of MLB has spun downward since the merger.
Have you ever listened to Jody MacDonald and ron Dibble on MLB? It is "dumb and dumber". (Daffy Duck and Ron Dribble)
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Subscription Downgraded
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Greedy Bastards
According to the FCC's guidelines, there were certain conditions that were to be followed to allow the merger. One of them being that the pricing would not be raised for 36 months.
Well as a subscriber to the Sirius I can tell you that they have used to loophole to skirt the provisions and effectively raised the prices, not once, but TWICE!
In the first instance, the did not raise the prices on the primary units, but raised the prices $2 month for each additional unit. Today I get another notice from Sirius that they are now adding a “Royalty Fee” charge of $1.98 per month on primary units and .97 for additional units.
Call it whatever you want, this is effectively 2 price increases in less than 6 months and is unacceptable.
I would like Congress to look into this matter and propose legislation to prevent not only Sirius XM, but all companies from engaging in this deceptive behavior.
Everywhere you look today, companies are engaging in deceptive practices and by raising prices and disguising them as additional fees and charges. This is standard practice on just about every rental car with concession recovery fees, battery fees, tire fees, license fees, etc. They are not the only ones, this practice is very common with hotels (resort fees) and now airlines are jumping into the fray.
This has to stop. The price should be the price. The only thing that should be allowed to be added is any taxes and fees required by law.
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Sevn Year Customer Gone!!!
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needed. It is a scam to get more money from us. Can't raise the rates so you triple the fee. No rate increases, no new fees. I will not renew my sub.
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bye bye xm
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I didn't go for this either...
When I let the trial expire, they started mailing me postcards offering special pricing for "coming back", and waiving the $14.95 "re-activation fee". (That's kind of insulting in itself. I have to PAY to re-activate, on service I never, ever paid for in the first place?!)
Well, *finally*, their latest "please come back" type offer was good enough, I actually considered it. Basically, an entire year for about $78, and they were even willing to bill me, vs. keeping a credit card on file. For under $80, I was ready to go for it (despite the sound quality being pretty bad for their music stations). But THEN when I was in the process of ordering, they mentioned the extra $12 or so for these new "royalties" and said there was absolutely no way to waive that charge. (Since it says NOTHING about that on the card they mailed me, and their quoted price says it's good through August 28th. -- I fail to see how they can legally refuse to honor that?!) So again, I told them to forget it.
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I cancelled
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RIAA Strikes Again!
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Just cancelled
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royality fees
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My shiny new XM Bill in the mail....
I called them, told them I was going to pay what I payed last year and that was it. They didn't even blink. Charged me the same amount. I told them that if prices, like the economy and peoples' incomes didn't come DOWN next year, I would become good friends with my Hi-def radio and MP3 player and they could pack sand.
I hope others have the same results I did.
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Sirius Royalty Charge
It's called Capitalism people and we have to like that right?
What a wonderful opportunity this country offers, and one more thing, let's support technology so it can phase out more jobs. Makes sense to me........
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Re: Sirius Royalty Charge
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royalty fee
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Scam through and through
There ought to be a way to pressure the car companies to allow the unconfiguring of Sirius from their onscreen menus. If you don't subscribe it just clutters up the screen and its just software and easy for the manufacturer's to do!
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