SoundExchange wins $9.7m royalties lawsuit against Slacker and parent company LiveOne – Music Business Worldwide

A court in California has ruled in favor of US performance rights organization SoundExchange in its lawsuit against Slacker, Inc. and parent company LiveOne in the US over unpaid royalties owed to creators and rights owners.

SoundExchange in June sued Slacker, a music platform that offers free and subscription-based access to licensed songs via music stations, accusing the firm of failing to pay statutory royalties to creators in 2017.

LiveOne, formerly LiveXLive Media, acquired Slacker Radio in 2017 for $50 million, the same year that Slacker allegedly stopped paying royalties to rights owners and artists.

SoundExchange said it has been negotiating with Slacker since 2017 to resolve its outstanding balance, but the latter allegedly failed to meet the terms that both parties agreed to, prompting SoundExchange to lodge a legal complaint in June.

Most recently, the United States District Court for the Central District of California on October 13 ordered Slacker and LiveOne to pay $9.7 million in unpaid royalties due to performers and rights owners, according to a Tuesday (October 18) release from SoundExchange.

The court also permanently barred Slacker and LiveOne from using the statutory license going forward.

A statutory license lets non-interactive digital music streaming services play music in exchange for monthly payments at the statutory rate determined by the Copyright Royalty Board.

SoundExchange, which helps creators collect royalties whenever their music is played anywhere in the world, says it collects statutory payments from more than 3,600 services and distributes monthly royalties to rights owners, recording artists and non-featured musicians and vocalists.

“Despite a prior agreement, multiple promises, and repeated negotiations, Slacker and LiveOne failed to pay properly for the music – on which the companies built their business model.”

Michael Huppe, SoundExchange

“SoundExchange takes our role in defending fair compensation for creators seriously. Despite a prior agreement, multiple promises, and repeated negotiations, Slacker and LiveOne failed to pay properly for the music – on which the companies built their business model,” Michael Huppe, President and CEO of SoundExchange, said.

Huppe added: “It is regrettable that this step became necessary, but we will not back down when it comes to protecting creators and ensuring they are well-represented and properly paid under the law. We are grateful for the court’s recognition of the value proposition and this judgment in our favor.”

The court’s judgment comes as LiveOne returned to profit in the fiscal first quarter ended June 30. It booked a net income of $1.4 million from April to June, versus a net loss of $8.1 million the previous year. In the fiscal year ended March 31, LiveOne registered a net loss of $43.9 million after booking $41.8 million in net loss in the year-ago period.

LiveOne’s CEO and Chairman, Robert Ellin, in August said the company expects its audio business to collectively achieve revenue in excess of $80 million in the current fiscal year.

In its quarterly report released at the time, the company said it believes “it has already adequately reserved for the amounts due to [SoundExchange].”

“The company is currently negotiating with [SoundExchange] to resolve this matter and if necessary, intends to hire counsel to defend the defendants in this matter,” it said.

LiveOne noted that it has license agreements to obtain rights to stream sound recordings from SoundExchange, Universal Music Group, Sony Music Entertainment, Warner Music Group, and more.

“If we fail to obtain these licenses, the size and quality of its catalog may be materially impacted and its business, operating results and financial condition could be materially harmed,” the company noted.

The company has yet to release a statement in response to the court judgment.Music Business Worldwide