Sirius XM (SIRI) announced today via an SEC filing that the company has reached a settlement with SoundExchange regarding royalties. The dispute is now a decade old, and while $150 million seems like a steep price, it works out to just $15 million per year, a sum that the company can easily absorb. The Street seems to have liked the news in that Sirius XM's stock continues to set new 52-week highs.
According to the satellite radio provider, this settlement resolves all outstanding claims, including audits, and the SoundExchange suit will be dismissed. Royalties have been a bone of contention for streaming services for quite some time. Sirius XM pays statutory royalties for the music that it plays. Much like Sirius XM, Pandora (NYSE:P) also pays its royalties in this manner.
While the royalty issue has been an ongoing battle for quite some time, it is a cloud of relief that will certainly take at least some element of risk out of stock. Back in 2013, when the suit was filed, the number that SoundExchange was seeking was $100 million. It would seem that in the years since, the settled upon amount was fair. Royalty law is something that Congress is struggling with as new avenues for audio entertainment evolve.
