SoundExchange Settlement Failure Sends AccuRadio To Bankruptcy

It was founded 25 years ago, and offers more than 1,400 online-only music channels to an adult audience with an advertising-supported platform attracting what the company says is “a loyal audience of over 1 million listeners a month.”

Now, the Kurt Hanson-helmed AccuRadio has filed for voluntary Chapter 11 bankruptcy protection. Why? It blames its financial fragility on SoundExchange.

In a statement released Wednesday afternoon, the bankruptcy filing in a Chicago federal court comes after an impasse was reached “in the face of litigation” from SoundExchange, the organization that negotiates streaming royalty fees.

As Hanson-led AccuRadio sees it, SoundExchange is engaged in “a royalty scheme that renders music streaming extremely challenging for all but the largest corporations.”

In prepared comments, Hanson said, “AccuRadio has spent almost 25 years building an innovative and well-loved music streaming service while facing royalty obligations that climbed to levels that seem to suggest the system is rigged, perhaps inadvertently, against small and midsize streamers. “The Copyright Royalty Board’s rate-setting process leaves small and midsize players out of the process because the extremely high costs of lawyers, expert witnesses, and discovery make participation virtually impossible,” Hanson said.

SoundExchange filed a lawsuit against AccuRadio in mid-2024. Hanson said it came as a complete surprise “because we had been working with their lawyers for months to reach a fair and reasonable payment plan — and we thought we were almost there. Then, after many more months of negotiating in good faith during the litigation process, we were led to believe that our latest proposal would be accepted by SoundExchange with only minor modifications. However, eventually SoundExchange altered its position and rejected that proposal. We were extremely disappointed that we couldn’t reach a negotiated settlement.”

Hanson argued that AccuRadio has been “a consistently reliable SoundExchange licensee for the vast majority of the past two decades,” having paid it upward of $13,500,000 in royalties. He also said that AccuRadio resumed full current payments to SoundExchange “many months ago and continues to keep current with ongoing obligations.”

While Hanson says the bankruptcy filing was not an easy decision, as revenues have been “consistently improving” and profitability has returned, AccuRadio is confident that it will emerge from it “healthier and more resilient.”