With a rate hike set to take effect tomorrow (7/29), some Sirius XM subscribers are complaining to the FCC about price gouging, claiming that the monopoly satellite radio company is using flawed math to justify the increase. Sirius XM had agreed to a three-year price freeze, but there is an exception for increased performance royalty fees.
As the one-year anniversary of the XM and Sirius merger arrives, the company is wasting no time implementing a price increase. The way the accountants at Sirius XM figure it, the 8.3% increase in what the company has to pay to the record labels for performance royalties translates into a 15.3% increase in the monthly subscription fee for satellite radio subscribers.
The merger docket is still open at the FCC – in fact, a Petition for Reconsideration filed by Mt. Wilson FM Broadcasters is still pending – and some disgruntled Sirius XM subscribers are complaining to the Commission about the rate increase.
“The post merger price and fee increases are just what those objecting to the merger feared. The upcoming royalty fee that is being passed through is reportedly more than the cost to the company, so in essence are a fee increase,” wrote James Peters of Tampa, FL. John Pavlica Jr. of Toledo, OH took issue with the company’s math, and claimed that the real cost to Sirius XM from the royalty increase is “about a quarter,” not the $1.98 per month increase taking effect July 29th. “If calculated right, the fee that should be passed over to consumers should be six cents at most, and they are charging us around $2 more a month,” complained Vince Scarlata of Park Ridge, IL.
Eric Krieg of Munster, IL also charged that Sirius XM is overcharging and that the agreement with the FCC only allowed for a “much, much smaller number” than the $1.98 increase. “This is an outrageous abuse of their agreement with the FCC regarding the merger,” he wrote.
RBR/TVBR observation: Since Sirius XM, unlike AM and FM broadcasters, is able to pass along performance royalties directly to the consumer, maybe the record labels should take the same approach in trying to collect payments for radio airplay. Congress could pass a real, literal Performance Tax – it would have the IRS collect money from the American taxpayers for the international record companies to take to their overseas headquarters, after dropping off a few bucks for US artists.
Once that was accomplished, the record labels would be able to focus on what they do best – figuring out how to divert the artists’ share to themselves.