Posted on August 9, 2009 by David Oxenford

SoundExchange and Corporation for Public Broadcasting Settlement on Internet Radio Royalties for 2011-2015

The Corporation for Public Broadcasting has entered into a settlement with SoundExchange extending their current agreement on Internet Radio royalties for "Public" radio stations through 2015.  The previous deal, about which we wrote here, covered the period from 2006 to 2010.  This new agreement picks up in 2011 and covers included stations through 2015.  As in the previous deal, the new agreement has a payment by CPB to SoundExchange satisfying all royalties for all of the covered stations.  This was the fourth agreement that was announced last week, about which we wrote here, although details of this deal had not previously been released.  We have written about the other deals entered into under the Webcaster Settlement Act of 2009 ("WSA"), including the deals with Sirius XM (here) and with other noncommercial webcasters (here). 

This agreement covers stations affiliated with NPR, American Public Media, Public Radio International, and the Public Radio Exchange. CPB will pay to SoundExchange $2,400,000 in five yearly installments, covering up to 490 public radio stations in the first year, and up to 10 additional stations per year thereafter (up to 530 in 2015).  The fee is also subject to adjustment if all of the covered stations exceed certain listening levels.  Those levels, and the required true-up for performances in excess of the caps, are set out below.  However, the CPB payments for excess performances are limited to a total of $480,000 over the 5 year period of the Agreement:

Year              Music ATH Cap              Per Performance Rate

2011                279,500,000                         $0.00057

2012                280,897,500                         $0.00067

2013                282,301,988                         $0.00073

2014                283,713,497                         $0.00077

2015                285,132,065                         $0.00083

The agreement recites that these rates represent a payment computed on the basis of 1/3 of the rate agreed to in the NAB settlement with SoundExchange (here), minus a discount for the ease of collection caused by the single payment from CPB.  If the covered stations stream anywhere near the Music ATH caps set forth above, that discount would be significant.  It is also interesting to note that the deal is, by its terms, not precedential in the upcoming CRB proceeding.  So why this suggestion as to how it was computed was included in the agreement is not clear.

Individual stations have few obligations directly to SoundExchange under this agreement.  It is NPR which makes the election to go forward with this deal, once the CPB Board has approved the deal. It appears that some stations which are major users of music (the top 30% of the users of music among the covered stations) have to provide information about the songs that they play for a majority of their web site performances.  Otherwise, simply complying with the rules on streaming, such as the performance complement (which we described here), and providing some information about songs the station played for limited periods of time each quarter, seem to be all that is required of affiliated stations.

For CPB affiliated stations, this settlement provides security through 2015 to allow them to build their Internet radio audiences.  It certainly is a benefit of being a CPB station - some of the most successful streaming stations on the Internet.
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Posted on January 15, 2009 by David Oxenford

SoundExchange and CPB Reach a Settlement on Webcasting Royalties - More Deals to Come?

The Corporation for Public Broadcasting and SoundExchange have reached an agreement on the Internet radio royalty rates applicable to stations funded by CPB.  While the actual agreement has not yet been made public, a summary has been released.  The deal will cover 450 public radio webcasters including CPB supported stations, NPR, NPR members, National Federation of Community Broadcasters members, American Public Media, the Public Radio Exchange, and Public Radio International stations.  All are covered by a flat fee payment of $1.85 million - apparently covering the full 5 years of the current royalty period, 2006-2010.  This deal is permitted as a result of the Webcaster Settlement Act (about which we wrote here), and will substitute for the rates decided by the Copyright Royalty Board back in 2007.

 The deal also requires that NPR drop its appeal of the CRB's 2007 decision which is currently pending before the US Court of Appeals in Washington DC (see summary here and here), though that appeal will continue on issues raised by the other parties to the case unless they, too, reach a settlement.  CPB is also required to report to SoundExchange on the music used by its members.  In some reports, the deal is described as being based on "consumption" of music, and implies that, if music use by covered stations increases, then the royalties will increase.  It is not clear if this increase means that there will be an adjustment to the one time payment made by CPB, or if the increase will simply lead to adjustments in future royalty periods. 

It is also unclear why the agreement covers only the current royalty period, and not the period from 2011 through the end of 2015, which was permitted by the Webcaster Settlement Act.  As we've written, the proceeding to determine the royalties for the next 5 years begins with the filings of Notices of Intent to Participate on February 4.  Thus, if the full deal does not cover that period, NPR will be right back in a proceeding to determine royalties almost immediately. 

The deal also seems to cover all streaming that complies with the statutory license (it is not interactive, it meets the statutory complement limiting the number of songs by the same artist can be played in a given period and sets other limitations, such as limits on pre-announcing when songs will be played - see our memo here).  So there appear to be no limits on covered stations setting up web-only streams, or streaming HD-2 and HD-3 streams, without any additional SoundExchange royalty obligations.

The signing of this deal also raises the question of whether there will be other deals under the Webcaster Settlement Act between now and the February 15 deadline.  Will there be a Valentines Day gift for non-CPB webcasters?  Stay tuned. 
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