Shelving the Music Library: SoundExchange’s Battle to Enforce Royalty Collection and its Implications

[1]

From genres like “Sunset Fuzz” to “Backyard BBQ” and “Mellow Morning,” Sonos Radio prides itself on curating “music for every moment” for its listeners.[2] This extensive catalog of music is the product of collaboration and licensing agreements between copyright collectives, music labels, artists, and Sonos.[3] However, recent developments have heightened tensions between the parties, creating uncertainty about the future of these relationships.[4] 

On June 16, 2025, SoundExchange, Inc. filed suit in the U.S. District Court for the Central District of California against Sonos, Inc. and Rhapsody International Inc., d/b/a/ Napster, Inc.[5] The complaint seeks compensatory damages from Sonos for the alleged “underpayment of statutory license fees and associated late fees,” totaling $3.4 million.[6] According to the pleading, this amount reflects unpaid royalty payments allegedly incurred between October 2022 and April 2023 on Sonos Radio.[7] 

This lawsuit follows a decision by the U.S. District Court for the Southern District of New York in SoundExchange, Inc., v. Sirius XM Radio, Inc.[8] In a closely analogous case, the court held that Sirius XM is not required to pay or remit $10 million in outstanding royalties to SoundExchange because SoundExchange lacked standing to litigate royalty disputes.[9] Interpreting Section 114 of the U.S. Copyright Act, the court concluded that Congress deliberately declined to extend SoundExchange the right to recoup royalties through “full-throated ... litigation.”[10] Although that decision is on appeal, Sonos has cited this case in its motion to dismiss.[11]

Copyright collectives, such as SoundExchange, are essential to the functionality of the music industry. They operate as intermediaries between individual artists, music labels, and streaming platforms. [12] In exchange for assuming the responsibility of royalty collection and distribution, labels and artists grant the collective permission to issue blanket licenses to digital interactive and non-interactive streaming services.[13] Copyright collectives have the distinct advantage of “creating a one-stop shop for licensors and licensees.”[14] Instead of negotiating with each label or artist individually, streaming services can capitalize on the blanket licenses provided by the collective.[15] Similarly, music labels can “claim and track their ... catalogs” in a centralized location.[16] 

If the court ultimately determines that SoundExchange lacks the statutory authority to sue for unpaid royalties, labels and artists worried about underpayment or misuse could respond by restructuring how their rights are administered.[17] Such an action would not be unprecedented. Labels have previously attempted to partially withdraw their catalogs from collectives that license to non-interactive streaming services due to royalty rate issues.[18] Courts have held that selective catalog withdrawal is prohibited, but total withdrawal is not.[19] Given this standard, any movement away from SoundExchange would directly impact Sonos Radio and other non-interactive services, which would lose entire catalogs at once. The only alternative available to non-interactive streaming services would be to negotiate directly with labels, subject to heightened rates and little leverage.[20] 

The disappearance or deterioration of non-interactive streaming could make interactive streaming the primary mode of music dissemination. Because interactive streaming services use dictated queues and deliberate curation rather than algorithmic music suggestions based on mood and genre, listeners’ exposure to new music may decline.[21] This could have adverse implications for rising artists seeking to break into the industry. Although interactive streaming services use some forms of algorithmic suggestions, they often rely on a “narrow range of music based on... [the listeners’] preferences.[22] This can perpetuate a homogenous music library and deter exploration of new sounds.[23] As a result, newer voices are likely to be drowned out by the mainstream voices of the industry.

Lastly, the potential loss of non-interactive streaming services could reduce competition and increase prices. With listeners corralled into a few platforms, labels may be positioned to charge higher prices in response to increased demand. Without the benchmark royalty rates established under the licenses SoundExchange administers for non-interactive streaming services, royalty negotiations between labels and interactive services would lack a baseline.[24] Without this anchor, royalty rates may surge.

As SoundExchange continues to fight for its right to litigate in courts on both sides of the country, the courts’ decisions will resonate just as widely. From royalty collection and distribution to playlist diversity, SoundExchange v. Sonos, Inc. et al. highlights how intertwined the digital streaming service industry is and how far reaching its implications extend.

References

[1] Photo by Charles Deluvio, Gray Sonos Speaker on Table, Unsplash (Nov. 23, 2017),  https://unsplash.com/photos/gray-sonos-speaker-on-table-OX_Zv7EFPmE

[2] See generally Sonos Radio, https://www.sonos.com/en-us/sonos-radio?srsltid=AfmBOopRBkCzauStkxvseo1Tkd1ek6CfJ9VeHrD-EfC0rhMu3xzib_y (last visited Oct. 20, 2025).

[3] See Eric Priest, The Future of Music Copyright Collectives in the Digital Streaming Age, 45 Colum. J.L. & Arts 1, 2–6, 9–11 (2021).

[4] See Complaint, SoundExchange, Inc. v. Sonos, Inc., No. 2:25-cv-05454 (C.D. Cal. June 16, 2025), ECF No. 1.

[5] See id.

[6] See id. ¶ 41.

[7] See id. ¶¶ 41, 49.

[8] See SoundExchange, Inc. v. Sirius XM Radio Inc., No. 24 Civ. 5491 (NRB) (S.D.N.Y. Aug. 7, 2025).

[9] See id.

[10] See id.

[11] See Defendant Sonos, Inc.’s Notice of Motion and Motion to Dismiss, or in the Alternative, Motion to Stay, SoundExchange, Inc. v. Sonos, Inc., No. 2:25-cv-05454-HDV-BFM (C.D. Cal. Sep. 9, 2025), ECF No. 26.

[12] See Priest, supra note 2 at 1, 4–5.

[13] See id. at 9–11.

[14] See id. at 37.

[15] See id. at 4–5.

[16] See What We Do, SoundExchange, https://www.soundexchange.com/what-we-do/ (last visited Oct. 26, 2025); see also Artists, Labels & Producers, SoundExchange, https://www.soundexchange.com/what-we-do/for-artists-labels-and-producers/ (last visited Oct. 26, 2025).

[17] See Priest, supra note 2, at 28–33.

[18] See In re Pandora Media, Inc, 6 F. Supp. 3d 317, 337-38 (S.D.N.Y. 2014).

[19] See Pandora Media, Inc. v. Am. Soc’y of Composers, Authors & Publishers, 785 F.3d 73, 77 (2d Cir. 2015).

[20] See Priest, supra note 2 at 32–36, 40.

[21] See Exploring the Dynamics of Interactive and Non-Interactive Music Streaming, The MLC (Dec. 4, 2023), https://blog.themlc.com/mlc-feature-old/exploring-the-dynamics-of-interactive-and-non-interactive-music-streaming.

[22] See The Impact of Streaming Platforms on the Music Industry: How Spotify, Apple Music, and Others Have Changed the Game, Illustrate Magazine (Sep. 9, 2024), https://illustratemagazine.com/the-impact-of-streaming-platforms-on-the-music-industry-how-spotify-apple-music-and-others-have-changed-the-game/.

[23]See id. 

[24] See Joseph Pomianowski, Toward an Efficient Licensing and Rate-Setting Regime: Reconstructing § 114(i) of the Copyright Act, 125 Yale L.J. 1531, 1541-43 (2016).