A Court Case Is Deciding Whether SoundExchange Can Sue on Your Behalf

Money Moves | Power JDM The Beat

A major royalty fight is now testing who has the power to recover missing digital performance royalties.

The case involves SoundExchange and SiriusXM. In 2025, a federal district court dismissed SoundExchange’s roughly $150 million claim against SiriusXM, finding that Section 114 of the Copyright Act does not give SoundExchange an express or implied private right to litigate royalty disputes.

In September 2026, the U.S. Court of Appeals for the Second Circuit heard arguments about whether that ruling should stand. According to reporting from Courthouse News Service, Bloomberg Law, and Inside Radio, judges questioned both sides.

The court has reserved its ruling. There is no decision yet, and the case is not a finding that SiriusXM underpaid royalties. It is a legal proceeding about whether SoundExchange can bring that type of claim in court.

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What happened in the district court

SoundExchange sued SiriusXM in 2023, alleging that the satellite radio company’s accounting treatment for bundled satellite and streaming subscriptions reduced the royalty base used to calculate payments. SoundExchange claimed the approach resulted in more than $150 million in unpaid digital performance royalties.

SiriusXM has disputed the allegations and argued that it followed the applicable royalty rules.

In 2025, the U.S. District Court for the Southern District of New York dismissed SoundExchange’s claim. The court concluded that Section 114 does not grant SoundExchange an express or implied private right to litigate royalty disputes.

That distinction matters. Section 114 designates SoundExchange to collect and distribute digital performance royalties for sound recordings played on qualifying non-interactive digital services. But the district court found that the statute does not clearly authorize SoundExchange to file lawsuits seeking to enforce alleged underpayments.

The lower court’s reasoning was based partly on the language Congress used elsewhere in copyright law. For example, Section 115 expressly gives the Mechanical Licensing Collective authority to bring certain lawsuits. Section 114 does not contain the same direct language for SoundExchange.

SoundExchange appealed the decision to the Second Circuit.

What the Second Circuit is weighing

During oral arguments in September 2026, the appellate judges focused on a basic question: If SoundExchange cannot sue, who can enforce alleged underpayments affecting thousands of artists and copyright owners?

SoundExchange argued that Congress created a centralized royalty system because it would be inefficient for individual artists to pursue every payment dispute on their own. Its position is that the authority to collect and distribute royalties, combined with references to enforcement in the statute, supports the ability to bring litigation.

SiriusXM argued that Congress knows how to give an organization the power to sue and did not do so in Section 114. Its position is that individual artists and copyright owners, not SoundExchange, must bring any appropriate claims.

The panel reportedly challenged both sides. Judges questioned SoundExchange about where the statute specifically creates a right to sue. They also questioned SiriusXM about the practical consequences of leaving artists to pursue complicated royalty claims individually.

The Second Circuit has reserved its ruling. Depending on the outcome, the case could determine whether SoundExchange remains the industry’s primary enforcement mechanism for alleged Section 114 underpayments.

Radio talking point

“SoundExchange can collect and distribute digital performance royalties, but a federal appeals court is now deciding whether it can sue when it believes those royalties were underpaid. The ruling could affect how artists and rights owners protect money from satellite radio and webcasting.”

What “standing” means, and why it decides cases before the merits

In everyday language, standing can sound like a question of whether someone is physically positioned to do something. In court, it is a threshold legal issue.

Standing asks whether the party bringing a case has the legally recognized connection and authority needed to pursue it. In this dispute, the question is not yet whether SiriusXM actually underpaid royalties. The first question is whether SoundExchange is the proper party to bring the lawsuit under Section 114.

There is also an important distinction between constitutional standing and what lawyers often call statutory standing or a private right of action. A party may be affected by a dispute but still lack a particular cause of action under a statute.

That is the issue the district court addressed. It concluded that Section 114 does not expressly or impliedly authorize SoundExchange to sue over alleged royalty underpayments.

If the Second Circuit agrees, the court may never reach the underlying accounting dispute. The case could end on the question of who is allowed to bring it.

Collecting royalties is not the same as enforcing them

SoundExchange is the entity that collects and distributes digital performance royalties for sound recordings played on non-interactive digital services, including satellite radio, webcasters, and similar services.

Its role is different from the role of a record label, music publisher, or personal manager. SoundExchange receives royalty information and payments under the statutory licensing system, then distributes eligible shares to featured artists and sound recording copyright owners.

The organization has distributed more than $13 billion to more than 800,000 creators.

The legal question is whether that collection and distribution role automatically includes the power to sue. SoundExchange says the system would not work effectively without a way to enforce payment obligations. SiriusXM argues that the statute does not give SoundExchange that authority.

The difference is important for artists. An organization can be responsible for administering money without necessarily being authorized to act as a plaintiff in every dispute involving that money.

Why individual artists rarely have the resources to sue a satellite radio giant alone

A royalty dispute involving a major digital service can require detailed information about subscription packages, revenue allocation, usage reporting, licensing categories, audits, and royalty calculations.

Most independent artists do not have access to the service’s internal accounting systems. They may also be owed an amount too small to justify the cost of federal litigation, even if the broader underpayment problem affects many creators.

That creates a practical concern at the center of the appeal. If the designated collection organization cannot sue, individual artists may have to coordinate claims, find attorneys, prove their own connection to the money, and obtain information held by a large company.

The Second Circuit’s questions reportedly reflected that tension. The judges scrutinized SoundExchange’s legal authority while also examining whether individual artists would have a realistic way to enforce payment rights without a centralized plaintiff.

The court’s eventual ruling may clarify whether SoundExchange can act as the industry’s enforcement agent, whether artists must bring claims themselves, or whether Congress needs to address the issue directly.

What it means for independent artists

The appeal does not change the basic need to document your rights and recordings. It does, however, highlight the importance of knowing how your royalty information is recorded.

Register directly so your claim is documented

If you are eligible for SoundExchange royalties, registration creates a record connecting you to your artist identity, recordings, payment information, and ownership claims.

Artists who perform on a recording and own their masters may need to register in both roles. Registration alone does not resolve every legal dispute, but incomplete records can make it harder to identify and distribute money.

Know that agency enforcement may narrow

The Second Circuit could uphold the district court’s conclusion that SoundExchange cannot sue under Section 114. If that happens, SoundExchange’s ability to pursue alleged underpayments in federal court may become more limited.

That does not necessarily mean artists have no options. It means the available options may depend on the specific facts, contracts, ownership arrangements, applicable state law, and future court or legislative action.

Understand your collection options

SoundExchange royalties are separate from several other music-income streams. Mechanical royalties, performance royalties for compositions, direct licensing payments, neighboring-rights income outside the United States, and master-use fees may involve different organizations and registration systems.

For SoundExchange specifically, artists should understand whether they are claiming as a featured performer, a sound recording copyright owner, or both.

Artists who own or control their master recordings may also collect eligible SoundExchange royalties when their music is played on qualifying non-interactive digital services.

Practical checklist for independent artists

Register as both featured artist and sound recording copyright owner

If you are the featured performer and own or control the master recording, review whether you should register in both categories. If a label or another company owns the master, confirm who is registered as the sound recording copyright owner.

SoundExchange registration is available through its official registration page.

Verify your ISRCs and performer metadata

An ISRC identifies a specific sound recording. Check that each release has the correct ISRC, artist name, track title, featured-artist information, and release details.

Incorrect spelling, duplicate artist names, missing featured performers, and mismatched ISRCs can interfere with accurate matching.

Check the SoundExchange Payee List for unclaimed funds

Search SoundExchange’s available payee and unclaimed-royalty resources for artist names, former stage names, band names, and companies connected to your releases.

Unclaimed royalties are held for approximately three years. The exact handling of funds depends on the applicable rules and the status of the royalties, so artists should not assume that unclaimed money will remain available indefinitely.

Keep contact and banking details current

Update your legal name, mailing address, email address, tax information, and payment details. An accurate catalog is not enough if the organization cannot verify or pay the correct person.

SoundExchange Direct allows registered creators to review account information, manage catalog details, claim recordings, and view royalty information.

Keep your own records of releases and airplay

Maintain a release spreadsheet or rights folder containing ISRCs, recording dates, release dates, ownership percentages, featured-artist credits, producer agreements, label agreements, distribution records, and known airplay or webcasting activity.

These records can help you identify missing data and support a claim if a payment or ownership dispute develops.

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The decision is still pending

The Second Circuit has not ruled on whether SoundExchange can sue SiriusXM over the alleged underpayment. The judges’ questions showed concern about SoundExchange’s statutory authority and the consequences of leaving artists to pursue complex royalty disputes individually.

For now, independent artists can focus on the parts of the system they control: accurate registrations, complete metadata, documented ownership, updated payment information, and organized release records.

Power JDM The Beat will continue tracking major music-business developments and artist royalty issues. More artist-focused coverage is available through PowerJDM.com, and listeners can access the station through the Power JDM app.