SoundExchange Sues Napster & Sonos, $3.4M in Unpaid Royalties

SoundExchange is suing Napster and Sonos for over $3.4 million in allegedly unpaid copyright royalties related to the Sonos Radio service.

Napster was once the face of online music piracy, but the brand came full circle after the rebranding of Rhapsody transformed it into a legal music streaming service. But now, together with audio giant Sonos, Napster is facing a lawsuit filed by SoundExchange seeking over $3.4 million in allegedly unpaid copyright royalties. The complaint centers on missed payments related to the Sonos Radio service, which was powered by Napster’s music catalog until 2023.

In a complaint filed in California federal court, SoundExchange is seeking over $3.4 million in “underpaid statutory copyright royalties” from both Sonos and Napster. Sonos Radio launched in April 2020 with Napster as the authorized agent submitting the required royalty reports and royalties to SoundExchange. Things went well at first, but payments stopped around May 2022.

That’s around the time that Napster had been acquired by venture capital firms Hivemind and Algorand, with a focus on web3 technologies like cryptocurrencies. According to SoundExchange’s complaint, that acquisition had resulted in a “complete breakdown of reporting and payment for the Sonos Radio service.” The alleged payment issues were discovered during an audit by SoundExchange in 2023, which found that together, Sonos and Napster owed millions in unpaid royalties.

Nowadays, Sonos and Napster are no longer partners, as Sonos switched to Deezer around April 2023. This change seemed to have solved the royalty issues, but SoundExchange still believes it is owed over $3 million.

“Sonos and its agent Napster have failed to pay at least $3,423,844.41 comprising royalties owed for the period October 2022 to April 2023, interest, late fees, and auditor fee-shifting costs, and subtracting Sonos and Napster’s payments made to date,” reads SoundExchange’s filing. “Late fees and interest continue to grow.”

SoundExchange’s complaint lists one count of underpayment of statutory royalties and one count of non-payment of royalties, per the audit. For both violations, SoundExchange is seeking damages of at least $3.4 million.

In March of this year, Napster was sold once more, this time to Infinite Reality—the company’s largest acquisition to date. Infinite Reality plans to use the brand to carve “a path to a brighter future for artists, fans, and the music industry at large.”