In a 30 page document filed with the court, Sirius XM (NASDAQ:SIRI) has officially responded to the request for Summary Judgement in a case that alleges consiracy against the royalty collection and distribution agency. The battle is over alleged interference on the part of Sound Exchange and A2IM in Sirius XM trying to obtain direct deals with record labels.
At stake are millions of dollars and the ability for Sirius XM to offer true personalized and on-demnad radio for music. On-Demand and personalization will be staples in Sirius XM's Satellite Radio 2.0 initiative. Satellite Radio 2.0 incorporates new technology on the satellite delivered content and makes Sirius XM Internet Radio much more robust.
While it is no secret that Sirius XM offers compelling content, rivals such as Spotify and MOG are much more customizable when it comes to music because they have direct deals with the record labels.
In its lawsuit, Sirius XM stated that it is seeking direct deals which offer the labels less money than they receive from Sound Exchange. Sirius XM points to the benefits of marketing for artists, as well as the removal of a middle man (Sound Exchange) and the fees associated. Royalty issues are currently being heard by the CRB with Sirius XM's David Frear and Mel Karmazin testifying on behalf of Sirius XM last week.
In its filing this week Sirius XM stated that the defendants, Sound Exchange and A2IM, have "tortuously interfered with Sirius XM's direct licensing efforts". The company puts up a compelling argument. Whether the court sides with Sound Exchange or Sirius XM is up in the air, but in the meantime the CRB is wrapping up testimony and will be deciding the royalty fate in the next few month.