Sirius XM Passes on Royalty Fee Hikes to Subscribers

06.18.2009

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Sirius XM subscribers are being told they will absorb a copyright royalty increase for the satcaster. Though Sirius and XM separately agreed not to raise fees for three years as a condition of their merger approval by the Federal Communications Commission, the agency did allow them to pass on any royalty increases since March 20, 2007, the date they asked the FCC to approve the merger.

In a letter to subscribers, Sirius XM Chief Service Officer Joe Zarella says that royalties have 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.” On July 29, an extra royalty fee of $1.98 will be tacked onto basic subscriptions. For multi-receiver subscriptions, an extra 97 cents a month will go into effect.

To soften the blow, 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.

The US Copyright Royalty Board increased the rate which the satellite service had been paying — 6% of gross revenues — to 6.5% for 2009. It will rise to 7% in 2010, 7.5% in 2011 and 8% in 2012.