The SoundExchange fight with SiriusXM shows how streaming, bundling, and royalty classifications can change the size of the check before it ever reaches those who actually made the music.
Can we have an honest conversation about something most people in the music business already know, but don’t always like to say out loud?
The royalty checks are getting smaller.
Not for everybody, not in every case, and not always for the same reason. But enough artists, songwriters, labels, publishers, and musicians have opened enough statements over the past few years to know something has changed. The money is harder to track, harder to understand, and in many cases, harder to find.
Most of these folks are not sitting around reading royalty regulations for entertainment. They make music. They play shows. They haul instruments, pay sidemen, buy strings, cut records, promote singles, and hope the next check looks a little better than the last one.
Then the statement arrives.
Sometimes it’s small enough to make you mad (or laugh). And sometimes the most frustrating part is not even the amount. It’s that nobody can explain it in plain English.
The easy answer is, “Streaming doesn’t pay.” That’s true enough, as far as it goes. But it’s no longer the whole story. The modern royalty problem is not just that the rates are low. It’s that the money keeps getting moved from one bucket to another before the creator ever sees it.
That’s why the current fight between SoundExchange and SiriusXM matters.
First, a little housekeeping, because this gets confusing fast. SoundExchange does not collect songwriting royalties. If you wrote the song, your songwriter and publisher money generally comes through places like ASCAP, BMI, SESAC, and The MLC, depending on the type of royalty. SoundExchange collects and distributes digital performance royalties for the sound recording. That means the featured artist and the owner of the master recording — often a record label, though in bluegrass it may also be the artist or a small independent owner.
So this particular lawsuit is not directly about songwriting royalties. But the principle behind it should matter to every songwriter, artist, label owner, sideman, and publisher in the business. Because if the same piece of music can be classified differently, bundled differently, or reported differently, the check can change dramatically.
Here’s the dispute in simple terms.
SiriusXM has a satellite radio service. It also owns Pandora and offers streaming access as part of certain packages. SoundExchange says SiriusXM has placed too much value on the streaming portion of those bundled packages, then removed that value from the satellite radio royalty pool. That pool is simply the pot of money created from SiriusXM’s satellite radio revenue that gets used to pay royalties to the artists and master owners whose recordings are played. SiriusXM says it’s following the rules and fairly allocating revenue between satellite radio and streaming.
That may sound like a dull accounting argument. It’s not.
When a company changes which bucket the money goes into, it can change how much money is available to pay creators. That’s the real issue. Not whether somebody listened in a car, on a phone, through an app, or through a dashboard. The issue is how much of the customer’s subscription money is counted for the royalty calculation.
Under the satellite radio rules, SiriusXM’s royalty rate for its satellite digital audio radio service is 15.5% of monthly gross revenue from that service. In plain English, that means the royalty pool is based on a percentage of SiriusXM’s satellite radio revenue. That rate comes from a separate statutory category created for satellite radio years ago, and SiriusXM is still required to pay it, even though it has pushed for lower satellite royalty obligations in rate-setting proceedings.
Webcasting is a different animal. Instead of starting with a percentage of satellite revenue, commercial webcasting uses a per-performance formula. In 2026, those rates are $0.0025 per non-subscription performance and $0.0032 per subscription performance. A “performance” means one song heard by one listener. Put in normal human terms, that is one-quarter of a penny on the low end, and just under one-third of a penny on the higher end.
That does not mean you can simply compare 15.5% to one-quarter of a penny and call it the same thing. They are different formulas. But that is exactly why the category matters. If revenue is counted in the satellite bucket, royalties are tied to SiriusXM’s satellite revenue. If it is counted in the webcasting bucket, the math changes to fractions of a penny per song, per listener. SoundExchange says SiriusXM put too much bundled subscription money into that second bucket, reducing what should have been paid to artists and master owners.
You do not need a law degree to see why that matters.
Imagine a company has $1 million in monthly revenue connected to a music service. If that full $1 million is counted under the satellite royalty formula at 15.5%, the royalty pool is $155,000.
Now imagine the company says 30% of that revenue belongs in a different bucket, because the customer also gets streaming access. Now only $700,000 is counted in the satellite pool. At 15.5%, the royalty pool drops to $108,500.
Same customer. Same music world. Same subscription price in this simple example. But the royalty pool is suddenly $46,500 smaller.
That’s before anybody talks about individual spins, label splits, featured artist shares, union funds, or who owns the master. The check has already been reduced before it gets to the people who made the record.
SoundExchange claims SiriusXM has wrongfully withheld more than $150 million in unpaid royalties over the past several years. SiriusXM disputes that and says this is an ordinary allocation issue involving bundled products. The first round in court went SiriusXM’s way, but not because the judge ruled that SiriusXM’s math was right. The court dismissed the case because it found that SoundExchange did not have the legal authority under Section 114 of the Copyright Act to bring that kind of lawsuit.
To many creators, that ruling may sound less like justice and more like a loophole big enough to drive a tour bus through. SoundExchange is the organization charged with collecting and distributing this money, so if it believes a service has underpaid, the obvious question is: who else is supposed to bring the fight? That is one reason the appeal matters. It is not just about past royalties. It is about whether the organization built to administer this system has the legal muscle to enforce it when there’s a serious dispute.
That’s an important distinction. The court did not settle the question most creators care about: Was the money calculated fairly?
SoundExchange has appealed. Music organizations are watching closely, and they should be. If SoundExchange is not allowed to enforce the license in court, that raises a very practical question: who is supposed to make sure the money is paid correctly?
Songwriters have seen the same general problem in a different form. The Mechanical Licensing Collective has challenged how services like Pandora and Spotify report and pay certain royalties, including disputes over whether features, bundles, or classifications reduce the money available to songwriters and publishers. Terrestrial radio is different again, with songwriter and publisher performance royalties handled through PROs, while the broader fight over sound recording royalties has long been tied to satellite and digital services. These are different cases, involving different rights, but the theme is familiar: when a service changes how music is classified, the royalty math changes with it. (That’s a subject we will take up in a future article here at Bluegrass Today.)
And in bluegrass, these differences matter. We’re not talking about pop stars arguing over whether a check should be enormous or merely very large. We’re talking about working artists, independent labels, songwriters, publishers, musicians, and families who may already be dealing with modest royalty statements. When the system shaves off a little here and a little there, it does not take long before a small check becomes almost nothing.
A bluegrass artist might have a song played regularly on satellite radio, internet radio, and streaming platforms and still have trouble figuring out who paid what, why it was paid, and whether it was paid correctly. That’s not because the artist is careless. It’s because the system is too complicated, too opaque, and too easy for the average creator to get lost in.
That’s why SoundExchange and The MLC matter. They are not perfect. No organization is. But they exist because individual creators do not have the time, money, staff, or legal leverage to chase every platform over every report.
If SoundExchange ultimately wins, what does that mean in plain English?
It does not mean every artist suddenly gets rich. It does not mean every bluegrass act will open the mailbox and find a life-changing check. Royalty distributions still depend on actual usage, ownership, registration, reporting, and the artist’s share of the recordings played.
But it could mean that money SoundExchange says should have been in the royalty pool gets put back into the royalty pool. It could also mean SiriusXM and other services have less room going forward to reduce royalty payments by shifting revenue away from the bucket that pays creators more.
Using that earlier example, a $1 million revenue pool counted fully at 15.5% creates $155,000 in royalties. If only $700,000 is counted, the pool drops to $108,500. If SoundExchange’s position wins and the larger base is restored, that missing $46,500 goes back into the pot for that example.
SoundExchange’s own complaint gives us an even more real-world way to look at it. It says SiriusXM began excluding at least 17.8% of its satellite gross revenue as webcasting revenue in 2021. It also says SiriusXM excluded 20.8% of self-pay Platinum revenue, then later increased that exclusion to 25.2% for self-pay Platinum subscribers. If those excluded dollars were put back into the royalty base, the affected royalties could rise by roughly 20% to 34%, depending on the subscription category and time period. That does not mean every artist’s total SoundExchange check would jump by that amount. But for artists and labels whose recordings receive meaningful SiriusXM airplay, it could be real money.
For a self-released artist who owns the master, SoundExchange money can be especially important because the artist may receive both the featured artist share and the sound recording owner share. For a label artist, the featured artist share is still paid directly through SoundExchange, while the master owner’s share goes to the rights owner. Either way, a larger royalty pool means there is more money available to distribute to the people connected to the recordings that were actually played.
That’s the hope in this case. Not magic. Not a windfall. Just a fairer count.
As for timing, this does not appear to be a matter drifting aimlessly into the distance. The appeal is already active in the Second Circuit, with briefs and oral argument statements filed earlier this year. As of this writing, we have not confirmed a specific argument date, but the court’s published calendar shows fall 2026 sittings ahead. In other words, this is worth watching now, not someday in the far-off future.
Nobody can honestly predict how the court will rule. But SoundExchange is not standing alone in this fight. Major artist, label, and musician organizations have lined up behind its appeal, not because they are looking for a technical legal victory, but because the practical question matters: if SoundExchange cannot enforce the license, who is going to make sure the money is counted and paid correctly?
And that may be the simplest way to understand the whole thing. Creators are not asking for special treatment. They are asking for the money to be counted honestly, classified honestly, and paid according to the rules.
For bluegrass, that matters. Our music has always lived on the edge of the mainstream business, which means every dollar has to work harder. The people who make this music are not usually sitting in glass offices with royalty analysts and lawyers on retainer. They are in vans, studios, churches, theaters, radio rooms, festival fields, and small label offices, trying to keep good music moving.
When the check keeps shrinking, they deserve to know why.
We will continue watching the SoundExchange appeal, along with the related songwriter-side fights involving The MLC and digital services. These cases may sound technical, but the outcome is not technical at all. It’s about whether the people who make the music are paid on the real value of the music, or on whatever value is left after somebody else moves the numbers around.
Sources reviewed: SoundExchange complaint against SiriusXM; SiriusXM public statement regarding the litigation; U.S. District Court order dismissing the case; Second Circuit appeal docket; SoundExchange SDARS and commercial webcaster royalty rate information.
