SoundExchange has escalated its legal battle against Napster, filing a motion for default judgment after the streaming service failed to respond to a $3.3 million lawsuit over unpaid royalties. The lawsuit, filed on June 16, 2025, targets both Napster and Sonos for royalties that went unpaid from October 2022 through April 2023, along with statutory interest, late fees, and audit costs.
The payment breakdown appears linked to employee turnover at Napster following its 2022 acquisition, when a key employee responsible for SoundExchange reporting departed and was never replaced. This administrative lapse created a significant financial liability that has now grown into a multi-million-dollar legal confrontation.
Sonos, which operated Sonos Radio with Napster providing backend services until February 2023, has taken a markedly different approach to the lawsuit. The speaker manufacturer is aggressively contesting the claims and pushing for dismissal, highlighting its shift to Deezer as its streaming partner after February 2023, after which royalty payments reportedly resumed without issue.
The SoundExchange lawsuit represents just one financial headache for Napster, which also faces a separate $9.2 million claim from Sony Music for unpaid royalties. Despite agreeing to a payment plan with Sony in March 2025, Napster allegedly failed to make installments totaling over $6.8 million, with additional missed monthly payments amounting to $2.4 million. The lawsuit involves high-profile artists including Justin Timberlake and Britney Spears whose works were allegedly used without proper compensation.
Napster’s corporate structure has undergone significant changes during this period, with Infinite Reality acquiring the company in March 2025 and subsequently rebranding as Napster Corporation in May 2025. This $207 million acquisition came amid ongoing royalty payment issues that predated the ownership change. Rhapsody, operating as Napster, missed the August 18 deadline to respond to the lawsuit after waiving service.
SoundExchange, as one of the industry’s prominent performance rights organizations, plays a crucial role in collecting and distributing royalties to artists and rights holders for digital audio transmissions of their work. These royalties represent essential income streams for musicians who depend on fair compensation from digital platforms to sustain their careers.
The combined unpaid royalties to SoundExchange and Sony Music exceed $12.5 million, placing significant financial pressure on Napster as it navigates these legal challenges. Meanwhile, SoundExchange’s default motion signals its determination to enforce compliance and collect the overdue payments through increasingly aggressive legal measures.
