SoundExchange v. Music Choice royalties lawsuit resumes after seven years

SoundExchange's lawsuit against Music Choice is moving again in federal court in Washington, DC, more than seven years after it was filed. The collecting society says the TV and background-music provider underpaid royalties owed to artists and labels, and a joint status report filed on November 2 proposes about 75 days to swap damages evidence, followed by settlement talks or mediation.

The case has been largely frozen since December 2021. It restarted after the D.C. Circuit ruled on August 18 that it had no power to review a Copyright Royalty Board decision Music Choice had challenged. Music Choice denies underpaying anything.

One phrase in a federal regulation

SoundExchange, the nonprofit the Copyright Royalty Board designated to collect statutory royalties, sued in April 2019. The claim concerns Music Choice's business establishment service, which supplies background music to shops, restaurants and offices. The statutory rate for that service was 10 percent of revenue for 2009 to 2013 and 12.5 percent for 2014 to 2018.

SoundExchange alleges Music Choice left out revenue from channels that also ran on its consumer TV service. Music Choice says it owes royalties only on revenue from music supplied exclusively to business customers. The argument turns on the definition of "gross proceeds" in 37 C.F.R. § 384.3(a)(2).

An audit by Prager Metis covering 2013 to 2016 prompted the suit. SoundExchange says Music Choice refused the auditors access to 2013 information, and that they found it was owed millions of dollars in unpaid royalties and late fees. The original complaint named no total. Late fees run up to 1 percent a month, 0.75 percent before 2014, and SoundExchange also seeks about $35,000 in audit costs plus legal fees. In 2019 its then general counsel, Colin Rushing, said Music Choice's "creative accounting has cheated creators out of the royalties they are due."

How the case got stuck

In December 2021, Judge Reggie B. Walton referred the meaning of the rule to the Copyright Royalty Board and paused the case. The Board's three judges ruled on the question in a document dated January 2025, with reporting placing the decision in December 2024. They sided with SoundExchange: the phrase "for the sole purpose" limits only in-kind payments, so a service must count all its business revenue except certain in-kind payments tied to dual-purpose recordings. Music Choice said it does not collect in-kind fees, which left its reading of the text with little room.

Music Choice did not go back to Walton. It petitioned the D.C. Circuit for review instead, and the district court paused the case again in April 2025. Judges Millett, Pan and Garcia dismissed that petition for lack of jurisdiction. The opinion found the Board's interpretation was not a formal determination, that Music Choice had not been a participant in any proceeding that produced it, and that it was not bound by it.

The ruling cuts both ways. Music Choice cannot appeal the Board's reading, but the court also said the reading is not binding on it. Walton must now decide how much weight to give it.

Who owns Music Choice

A January 2025 filing listed Sony Group Corporation, Warner Bros. Discovery, CommScope and Comcast as holders of 10 percent or more. Music Business Worldwide notes that Warner Bros. Discovery has since been acquired by Paramount Skydance and CommScope Holding Company has renamed itself Vistance Networks. Sony, one of the three major labels whose artists SoundExchange pays, is therefore an owner of the defendant.

The standing question next door

A separate dispute could limit what SoundExchange can do here. In August 2025, a federal judge in New York dismissed its suit against SiriusXM, ruling that the law naming SoundExchange as the collector does not give it the right to sue over unpaid royalties. SoundExchange appealed, putting the alleged underpayment above $400 million, which SiriusXM denies. The Second Circuit heard arguments on September 25 and has not ruled.

Courthouse News reported that Judge Richard Sullivan asked why artists could not file a class action themselves. SiriusXM's lawyer, Andrew Tulumello, said SoundExchange was starting to act like a "private attorney general." A $3.4 million SoundExchange suit against Sonos was put on hold in December 2025 until that appeal is decided. Digital Music News noted it is unclear whether the Music Choice case could be affected, and the reporting reviewed here does not say whether Music Choice has raised the issue.

The schedule from here

The parties' joint report points to damages discovery lasting about 75 days, then settlement talks or mediation, with the phase likely ending in early March. If talks fail, Walton will rule on the amount owed, and on how far to follow the Board's reading of the rule. Neither side has disclosed a settlement figure.