Sirius XM Passes RIAA Tax On To Consumers

from the but-of-course dept

Not quite sure how I missed this earlier (update: oops, turns out we didn't miss it -- so consider this an encore presentation), but Bret alerts us to the news that with the ever increasing royalty rates pushed by the RIAA in the form of its "spin-off" Sound Exchange, and codified by the Copyright Royalty Board (for whom I still do not understand how anyone can justify its existence), that Sirius XM has simply added a $2 RIAA tax to everyone's monthly bills to help pay for the new performance royalties. Yup, because the RIAA and its members haven't been able to come up with a business model that works, they get the courts to tax you for listening to your satellite radio (on top of what you already pay and what they already pay to songwriters and publishers) and that gets passed on to you. Just imagine what will happen if the RIAA gets its wish and gets to add a similar tax to terrestrial radio stations as well. If you thought radio was chock full of commercials before...

Filed Under: performance royalties, radio, satellite radio, tax
Companies: riaa, sirius xm

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. icon
    Derek Kerton (profile), 19 Aug 2009 @ 5:12pm


    "companies don't pay taxes, end users do."

    Lots of people arguing this line in these comments. But it's a very trite simplification of fiscal issues. Of course taxes are paid by people in the end. People are the only things that are real. Corporations and businesses are imaginary, arbitrarily created entities, which are ultimately owned by people and financed by purchases of end customers. No news there. But it adds another group of people and busts your assumption that all costs are borne by "end users", namely "shareholders". All taxes are paid by shareholders OR end users, and it's unclear in what proportion.

    But the point you're trying to make seems to be that taxing corporations is futile because the taxes just get passed back to consumers. You seem to think that "we are only taxing ourselves" or that it would be simpler (but not desired) just to increase income taxes or do a poll tax. Taxes do more than just taxing ourselves to pay ourselves, they redistribute money, and have distortion effects on the market.

    But what if the fiscal policy were intended to inflict a distortion in the market, like a pollution tax? Occasionally, we actually want to distort markets towards a more desirable equilibrium (like one where pollution externalities ARE counted.)

    Love them or hate them (and I suspect most choose the latter), taxes CAN be a much more nuanced tool than you seem willing to acknowledge. They can be used to gain revenues for specific things that incur costs, such as highway tolls. Or to dissuade certain behavior, such as smoking. Or to encourage certain behavior, such as home ownership. I'm not casting a judgement on any of those fiscal policies, merely stating the more nuanced reality that taxes beset onto corporations/industries are not unilaterally "passed on to the people".

    Even if passed on to the customer 100%, they only get passed back to consumers of THAT company/industry. Thus, it is a tax on that industry, which offers advantages for competing substitutes.

    When a tax is placed on an industry, supply meets demand at a lower volume. A reduction in total production has unpredictable effects on average costs. Basically, there are many intended and unintended consequences of a tax on a specific good, but the burden of the tax is usually split between shareholders and consumer, not just passed on 100%.

    Despite your best efforts to simplify the world, it remains complicated.

    Also, this is a tangent, since the article is about RIAA fees, not taxes. Understood. As we have seen in these comments, Sirius may lose enough customers by raising fees that it would be better to eat the loss.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Techdirt Gear
Shop Now: Copying Is Not Theft
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Report this ad  |  Hide Techdirt ads
Recent Stories
Report this ad  |  Hide Techdirt ads


Email This

This feature is only available to registered users. Register or sign in to use it.