SiriusXM's $726 million royalty bill and the AI fight over the streaming pool

SiriusXM's royalty bill takes a third of revenue

SiriusXM's revenue share and royalty costs rose $5 million year on year to $726 million in the third quarter. That equals 33.7% of total revenue, up from 33.4% a year earlier, according to results the company published on 29 October. Music Business Worldwide reported the figures on 2 November.

Anyone who pays for a subscription is funding a split between the platform, the labels, publishers and artists. The shares move as subscriber numbers shift. What no listener sees is a fixed rate per stream, because platforms pool subscription and ad money and divide it by listening share. What remains unsettled is how much AI-generated music dilutes that pool.

The split inside the bill matters. The SiriusXM satellite and streaming segment accounted for $392 million of the total, up 2% year on year, while the Pandora and Off-platform segment paid $334 million, down 1%. Pandora's audience is shrinking underneath those payments. The service ended September with 38.81 million monthly active users, down 6.6% from 41.56 million a year earlier, a fall of 2.75 million. Self-pay subscribers across Pandora Plus and Premium totalled 5.51 million, down 177,000, and ad-supported listener hours dropped 10% to 2.25 billion. Fewer listeners, fewer paying customers, and a royalty bill that still grew.

Consolidated revenue slipped from $2.159 billion to $2.153 billion. The company blamed a 16% fall in equipment revenue, which it tied to the rising cost of memory components in its radio hardware, while net income rose 7% to $317 million.

The satellite service itself held up. It added about 5,000 self-pay subscribers in the quarter, against a net loss of 40,000 a year earlier. It ended September with 32.85 million total subscribers, 31.26 million of them self-pay, at an average monthly revenue per user of $15.18 versus $15.19.

The labels' side of the ledger keeps growing

Universal Music Group reported third-quarter revenue of 3.394 billion euros on 29 October, up 12.3% year on year. Revenue from paid accounts in recorded music rose 19.2%, ad-supported streaming edged up 4.7%, and physical sales rose 17.4% at constant exchange rates. Paid subscriptions did the heavy lifting.

The company credited the paid-subscription result to higher wholesale prices and steady subscriber growth. Price plus volume: that is the engine.

The IFPI Global Music Report 2026, published on 18 March 2026, put 2025 recording industry revenue at $31.7 billion, up 6.4% and the 11th consecutive year of growth. Streaming contributed more than $22 billion, or 69.6% of the total. Paid services were projected to grow 8.8% and to hold 52.4% of the market, with 837 million subscribers worldwide. Two thirds of the business now runs through one pipe.

How one stream turns into a payment

Spotify's documentation for artists says a single listen generates two separate royalties. Recording royalties go to the record owner, usually a label or distributor. Publishing royalties go to the songwriter and composer, covering performance and reproduction rights.

The singer is not always the songwriter, and the songwriter is not always the record owner. Spotify also states that it does not pay a fixed amount per listen, and instead uses a streamshare mechanism to divide the money it collects. No fixed per-stream rate exists.

Direct sales show how wide the gap can be. Bandcamp charges a 15% revenue share on digital sales, dropping to 10% after $5,000 in cumulative sales, and 10% on physical goods. Payment processing adds 4% to 6% per transaction, so total deductions on a digital sale land around 19% to 21% before that threshold. Ones To Watch estimates that one $10 album sale earns roughly what 2,000 to 3,000 Spotify streams pay out.

Collective licensing produces its own arithmetic. COSOTA, Tanzania's copyright society, says it distributes 70% of collected licence fees to rights holders and allocates 30% to administrative costs. It lists three distribution classes: broadcasting and public reception of broadcasts, public performances including music played in commercial premises, and film projection and commercial lending of video recordings.

The AI fight over who gets counted in the pool

Universal Music Group, Sony Music Entertainment and DistroKid told a federal court in Manhattan they "are working on a resolution" in their dispute over DistroKid's AI music data. The joint filing was approved by US District Judge Arun Subramanian on 28 October. The filing does not say what a resolution would involve.

The labels want figures on how many of the tracks DistroKid delivers to streaming services are flagged as AI-generated. They also want the streams and royalties those tracks earned, and how many are attributed to Suno. They are using the data as evidence against Suno.

In their motion, the labels said DistroKid "refuses to produce a single document". They called it "one of the primary conduits by which the streaming market is being flooded with AI-generated recordings". DistroKid says it distributes 30% to 40% of all new music in the world. Digital Music News reported that its response deadline moved to 6 November from 4 November. The deadline slipped by two days.

The stakes in the underlying case are large. The suit against Suno, first filed in June 2024, covers 560 recordings and seeks up to $150,000 per work, a theoretical maximum of about $84 million. A second suit filed in September covers 60,202 further recordings. Warner Music Group, originally a co-plaintiff, settled with Suno in November 2025.

Suno is also pressing Apple. It filed on 27 October to oppose Apple's bid to block a deposition subpoena, after Apple asked a California court on 13 October to block it. Suno has accepted a written sworn statement on five of nine topics and still seeks live testimony on four, including Apple's licensing talks with the two labels.

What happens next

The Manhattan court has yet to rule on the labels' proposed order. It asked the court to require DistroKid to hand over the documents by 30 October.

SiriusXM raised full-year 2026 guidance for the second consecutive quarter. It lifted revenue, adjusted EBITDA and free cash flow forecasts by $25 million each and now expects revenue of about $8.55 billion. CFO Zac Coughlin credited a more efficient operating model and declining satellite capital spending. He said that put the company in a position to step up share buybacks in 2027.

Its 10-Q, published the same day as the results, covers a February 2024 lawsuit by the Mechanical Licensing Collective. The collective alleges Pandora underpaid mechanical royalties on its free, ad-supported tier, which it argues qualifies as an interactive service. That definition decides who gets paid.