Sirius and XM are still in the midsts of a proceeding in front of the Copyright Royalty Board (CRB) over music performance royalties to be paid to SoundExchange. A recent SEC filing by Sirius provides more clarity over what has taken place, and what's currently on the table.

In June, the hearing took place between Sirius/XM and SoundExchange (the organization that collects and distributes the royalties to performance artists). In July, all parties filed rebuttal cases, and in August the CRB will convene to have the rebuttal evidence presented.

Now here's where the
Sirius and XM originally proposed a royalty rate of 0.89% of all satellite radio subscription revenue. But this has now changed (at least for Sirius - and I assume XM - though that has not been specifically noted) . They've proposed a new rate of $1.20 for each performance made of a copyrighted sound recording.

That's for 2007. Sirius (and again, presumably XM) also proposed that this royalty rate be adjusted each subsequent year by a percentage equal to the percentage change in aggregate satellite radio subscribers during the preceding year.

SoundExchange has originally proposed a scaled system, ranging in seven steps - from 8% of all revenue, to an incredible 23% of all revenue. That translates to a range of $0.85 per subscriber, to $3.00 per subscriber. The problem with this (in my opinion) is that a percentage of all revenue makes no sense when a large amount of the programming made available on Sirius and XM is talk, news and sports programming. All of which already have their own individual contract arrangements (and Sirius/XM pay significantly for them). There's no need for performers to get a cut of Howard Stern's listenership.

But SoundExchange has also provided an alternative, which is encouraging. It's a per-broadcast fee structure, which (they claim) is calculated to reach similar fee levels if Satellite Radio continues with their current level of music performances.

The key takeaway here is a per-performance rate is now on the table. I'm not sure how many performances either service plays per month (a figure I heard from XM was 160,000 unique songs per month - but that's not all inclusive), but a per-performance rate sounds far more reasonable than a percentage of all revenue. Keep in mind that Mel has previously testified that he would consider removing music from the service if the original SoundExchange rate proposal were adopted. So it's encouraging that SoundExchange is also considering a per-broadcast structure.

Sirius said at last week's earnings call that they expect a decision from the CRB proceedings by the end of this year.

[Sirius 10-Q]