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Sirius XM must raise prices to pay music royalties

The Copyright Royalty Board has raised music royalty fees and the satellite radio provider will pass those costs on to customers starting next month.

Satellite radio provider Sirius XM is preparing to raise prices.

The Copyright Royalty Board has raised music royalty fees and Sirius will pass those costs on to customers starting next month.

In a letter to subscribers, Sirius CEO Joe Zarella said "Beginning on July 29, 2009, a 'U.S. Music Royalty Fee' of $1.98 per month for primary subscriptions and $.97 per month for multi-receiver subscriptions will be effective" the next time they renew their subscription.

Royalty rates have risen steadily since 2007 when the CRB established performance royalty rates for satellite radio. The rate jumped from 6 percent last year to 6.5 percent this year and will go up every year until 2012, when the rate will top out at 8 percent.

Sirius and XM promised the Federal Communications Commission they would not raise rates as a condition of the companies' merger, but the FCC did allow them to issue rate hikes to account for any increase in royalty costs.

In an FAQ posted on Sirius' site, the company states plainly that satellite radio providers are being charged fees that traditional radio stations aren't required to pay.

"Unlike terrestrial radio, both Sirius and XM are required to pay copyright music royalties to recording artists, musicians, and recording companies who hold copyrights in sound recordings," the company said.