Music Keeps Satellite Radio in Orbit, Survey Finds

WASHINGTON, Nov. 10 /PRNewswire/ — A recent study of satellite radio subscribers and potential subscribers shows that music — not big name celebrities, sports or talk radio — is what attracts listeners to those services and keeps them subscribing. The independent survey, conducted by Dr. Yoram “Jerry” Wind, professor of marketing at The Wharton School of the University of Pennsylvania and author of 23 books on marketing, establishes the enormous value of music to the satellite radio services.

The survey was conducted for SoundExchange, Inc., a non-profit corporation responsible for collecting and distributing digital music royalties (e.g., satellite and Internet radio) on behalf of artists and record labels, and was included in SoundExchange’s recent filing before the federal Copyright Royalty Board (CRB). Using testimony from a variety of leading experts, including Professor Wind, SoundExchange’s filing made the survey available to the CRB in support of SoundExchange’s assertion that fairer royalties should be paid by XM Satellite Radio and SIRIUS Satellite Radio to artists and copyright holders whose works are transmitted by those services.

Music is key to survival of satellite radio

The results of the survey found that consumers value satellite radio far more for its music than for any other programming formats like news, talk and sports. Additionally, consumers valued music more than commercial-free programming and nationwide coverage. Some of the survey’s key findings include:

   *  Almost half of all respondents (43 percent) said they would cancel      their subscription (or not subscribe in the first place) if satellite      radio lacked music. That is triple the number of respondents who would      cancel if any other type of programming were unavailable.    *  Fifty-three percent of respondents cited music as the most critical      programming factor in their decision to subscribe to satellite radio.    *  Respondents spend nearly half (49%) of their time listening to music      programming.    *  If music were not available, respondents on average would only be      willing to pay $6.15 per month for satellite service, not the current      $12.99 per month.   

The survey of 428 randomly selected individuals — all either current XM or SIRIUS subscribers or considering subscribing within 30 days — demonstrates the overwhelming importance of music to XM’s and SIRIUS’ ability to grow their subscriber base. “One clear takeaway from this survey is that the foundation of satellite radio is built on music. Without music, satellite services would crumble,” said John Simson, executive director of SoundExchange.

Music’s value unappreciated by XM and SIRIUS

Under the Digital Millennium Copyright Act of 1998, certain digital services, including satellite radio, are permitted to stream any sound recordings that have been released to the public — regardless of whether or not they have received a separate license from the record label or other copyright owner. The royalty rate is determined by the CRB as part of a public rate-setting proceeding.

In their filings before the CRB, XM and SIRIUS proposed a rate of less than one-percent of their total revenue for each of the next six years. The royalties from this minor payment would need to be shared among the tens of thousands of copyright owners and performers whose recordings they play. By contrast, SoundExchange, citing the fundamental importance of music to satellite radio, proposed an escalating scale beginning at 10 percent of revenues in 2007.

“We are great fans of satellite radio. The wide variety of music offered on dozens of channels and the depth of the music catalogue offered to consumers is terrific. The mutual dependence that has evolved between satellite radio and the labels and artists who provide the music cannot be understated. It is in many respects a partnership. However, it is time for the satellite companies to pay artists and copyright holders a fair royalty. Not giving artists their due — and proposing a rate of less than one percent of their revenues — is clearly a slap at the music community. SIRIUS currently pays Howard Stern at least $100 Million per year for content on a couple of channels. At their proposed rate, their payment for music on 64 channels would equal less than one-tenth that amount,” added Simson.

It is expected that the Copyright Rate Board will adopt a rate by the end of 2007 or early 2008.

SoundExchange is the first performance rights organization in the United States to collect and distribute digital audio transmission royalties to artists and sound recording copyright owners. SoundExchange represents over 2,000 different record companies and thousands of recording artists, and is seeking out more labels and artists who are owed royalties for sound recordings played on digital cable and satellite television music services, satellite radio services and non-interactive Internet services. The non- profit organization is governed by a board of artist and label representatives. SoundExchange offers track level accounting of performances and collection and distribution of foreign royalties to all members. All artists, labels and/or their representatives are invited to visit http://www.soundexchange.com/.

SoundExchange

CONTACT: Willem Dicke of SoundExchange, +1-202-857-9685,wdicke@soundexchange.com

Web site: http://www.soundexchange.com/