Comedy Central Records Has Withheld Royalties Owed for Performances Broadcast on SiriusXM, Class Action Alleges

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Comedian Myq Kaplan has filed a proposed class action in which he alleges a “secret direct licensing deal” between Comedy Central Records and SiriusXM years ago has led to a significant reduction in royalties paid to comedians whose work is broadcast by the satellite radio provider. 

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The 20-page breach-of-contract lawsuit says that for years, SiriusXM paid royalties for digital performances of works produced under the Comedy Central Records label in accordance with the licensing provisions of the Digital Performance in Sound Recordings Act of 1995 (DPSRA). 

Around May 2013, however, defendant Comedy Partners, the Paramount Global subsidiary who runs the Comedy Central TV channel and record label Comedy Central Records, executed with SiriusXM a “secret direct licensing deal” through which the satellite radio company would pay royalties for digital comedy works on Comedy Central Records directly to Comedy Partners as opposed to SoundExchange, the non-profit designated by Congress to administer digital performance royalties under the DPSRA, the complaint states. 

Per the suit, Comedy Partners represented that comedians would continue to be paid royalties at the proper statutory licensing rates under the deal, and Kaplan and proposed class members were, for a time, paid proper royalties for their performances broadcast on SiriusXM, the lawsuit says. The case alleges, however, that in the years since the consummation of the Comedy Partners/SiriusXM pact, the defendant has “engaged in conduct that has significantly reduced the amount and portion of revenues” payable to comedians for performances of their works on SiriusXM. 

Under the DPSRA, digital service providers such as SiriusXM are required to pay royalties for digital performances of copyrighted works on their platforms, the suit explains. In the absence of a direct licensing agreement between a digital service provider and a copyright owner, the provider’s digital performance of copyrighted work is subject to the DPSRA’s statutory licensing provisions, the complaint states. In such cases, a digital service provider pays royalties based on federally approved licensing rates to SoundExchange, who then accounts for and pays 50 percent of the royalties to the copyright owner and 45 percent to the featured artists of the copyrighted work, according to the suit. 

Where there exists a direct licensing agreement between a digital service provider and a copyright owner, the lawsuit relays, royalties are paid at negotiated rates and the responsibility to collect, account for, and pay royalties to featured artists falls to the copyright owner. 

Per the suit, SiriusXM, “[u]p to and through roughly the fourth quarter of 2013,” paid the 50-45-percent split of royalties for digital performances produced under Comedy Central Records in accordance with the provisions of the DPSRA. Earlier in 2013, however, Comedy Partners “secretly negotiated and signed a deal” with SiriusXM through which royalties owed by the digital service provider for performances of proposed class members’ works would “no longer be subject to statutory licensing under DPSRA,” the case alleges. 

“The details of this deal have been kept hidden by Defendant. In fact, Defendant did not notify Plaintiff or the Class Members of the deal until nearly two years after it was executed, and even then, knowingly and intentionally misrepresented the effect of the deal upon the royalties that would be paid to Plaintiff and the Class Members for performances of their Works on SiriusXM.” 

From roughly early 2014 through late 2017, Comedy Partners paid Comedy Central Records performers for their works broadcast on SiriusXM at the statutory licensing rates, the filing states. Yet around early 2018, the royalties paid by Comedy Partners to proposed class members for performances of their works on SiriusXM “sharply declined, despite the number of such performances remaining stable,” the lawsuit alleges. 

Since 2018, the royalties paid to Comedy Central Records performers for broadcasts of their work on SiriusXM have “dwindled down to 2 – 4% of what they previously received” and would receive on a per-performance basis if they were still paid in accordance with the DPSRA’s statutory licensing rates, the complaint says. 

Compounding matters is that Comedy Partners’ royalty statements lack any information that would help Comedy Central Records performers “evaluate the adequacy” of the royalties they’re paid for performances of their works on SiriusXM, the suit adds. 

The lawsuit charges that as a result of Comedy Partners’ “systematic and continuous breach” of its duty to Comedy Central Records performers, coupled with its “bad faith conduct” concerning the SiriusXM deal, the company has caused proposed class members to incur “substantial damages.” 

The suit looks to represent all persons and entities in the United States, their agents, successors in interest, assigns, heirs, executors, trustees, and administrators who are or were parties to licensing agreements with Comedy Partners and any of its predecessors and subsidiaries that do not contain a blanket license exclusion and whose works have been publicly performed by digital audio transmission on SiriusXM pursuant to such licensing agreements. 

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