With 2008 almost upon us, webcasters streaming music on the Internet need to remember that the way of computing and paying royalties to SoundExchange will shift on January 1- a change that may be especially important for broadcast stations. Under the Copyright Royalty Board decision reached last March, webcasters must pay royalties computed on a per "performance" basis. A performance is a per song, per listener computation. In other words, if an Internet radio station plays a song and 15 listeners are logged into the station at the time that the song plays, there would be 15 performances on which the royalty would need to be paid. While broadcasters objected that they did not (and in many cases could not) track the number of performances that were made by their stations on the Internet, the CRB, on reconsideration of their initial decision, only went so far as the give stations an interim rate based on the number of "Aggregate tuning hours" that a station served (e.g. one listener listening for one hour, or two for a half hour each would both be the equivalent of one aggregate tuning hour). See our post, here, on the CRB's reconsideration decision. The aggregate tuning hour (or ATH) metric is one that is more readily obtain from a content delivery network or other bandwidth provider, and a metric that has been used since the first royalties were established in 2002. Yet as of January 1, as the interim ATH rate applied only to 2006 and 2007, that method of payment will no longer be available, and many webcasters are wondering what to do to compute the per performance royalty.
Neither the CRB decision nor SoundExchange, which collects the royalties, explained what a webcaster who cannot count performances is to do when the option to pay based on aggregate tuning hours disappears. The royalty for January performances is due to be paid to SoundExchange on March 16 (45 days after the end of the month), and a webcaster preparing to file its royalty statement on that day will need to have a performance count to include on its statement. Many Internet radio companies have been trying to determine how to count performances and, while there are some services that offer to provide software to do so, it is my understanding that none are foolproof and, in some cases, they may not be able to get a complete count of performances. And many smaller stations may not be able to afford such systems.
Several companies including Ando Media, Abacast and Liquid Compass offer services that will count the number of listeners to a stream and synchronize those numbers with the songs that are being served by a station's music scheduling software to compute a number of performances. Reports of use for filing with SoundExchange are also prepared. We have not tested these services and cannot endorse them, but are providing this list for informational purposes for webcasters to explore further. (There may well be other such services available that readers may suggest). However, as I understand it (and perhaps some readers can correct me if I am not correct), not all of these systems are foolproof. One of the biggest issues is what happens when music does not run through a station's music scheduling software? For instance, if a station is picking up syndicated programming where the syndicator selects the music and the music does not run through the station's scheduling software, some of these services may not be able to track the performances that result from such the webcast of such programs. Other glitches may also exist, e.g. for a radio station where the on-air announcer picks his own music that is never run through any scheduling software.
These and other ambiguities will hopefully be remedied over time. However, with the deadline so close, stations should be aware of the change in the rules, and make plans to comply as fully as possible by the new deadlines - which would mean planning right now, if they have not already done so.