The Copyright Royalty Board has published in the Federal Register a correction to its notice announcing the commencement of the next proceeding to set rates for the royalties paid by webcasters (including broadcasters who stream their music through the internet) to SoundExchange for the public performance of sound recordings in the period 2026-2030.  The correction is to the date by which interested parties must file a petition to participate – setting that date as February 5, 2024, not February 6 as originally stated.  Thus, interested parties have a deadline one day earlier than previously announced.  We wrote more about that proceeding here.

The CRB also published in the Federal Register a notice announcing that it would be auditing five broadcast companies who are streaming their signals to assess their compliance with the statutory music licenses provided by Sections 112 and 114 of the Copyright Act for the public performance of sound recordings and ephemeral copies made in the digital transmission process by commercial webcasters. Another audit notice has gone out to a company called RFC Media, which is both a webcaster and a Business Establishment Service whose royalties are exclusively paid under Section 112 of the statute (see our article here about the CRB-set royalties for these services that provide music played in various food and retail establishments and other businesses).Continue Reading Copyright Royalty Board Issues Correction of Deadline to File Petitions to Participate in New Proceeding to Set Webcasting Royalty Rates for 2026-2030, and Issues Notices of Audits of Webcasters

Update (January 24, 2024) – The Copyright Royalty Board issued a Federal Register Notice correcting the deadline for Petitions to Participate in the WEB VI proceeding – making clear that the deadline is February 5, 2024, not February 6 as previously reported. This article has been updated with the corrected deadline. For more information, see our article here).

The Copyright Royalty Board on Friday published in the Federal Register a call for interested parties to file Petitions to Participate in the proceeding to set the royalty rates to be paid by webcasters (including broadcasters who simulcast their programming through internet-delivered channels) in the period 2026-2030.  These royalties are paid by webcasters to SoundExchange for the noninteractive streaming of sound recordings.  The CRB is required to review these rates every five years.  These proceedings are lengthy and include extensive discovery and a trial-like hearing to determine what royalty a “willing buyer and a willing seller” would agree to in a marketplace transaction.  Because of the complexity of the process, the CRB starts the proceeding early in the year before the year in which the current royalty rate expires.  So, as the current rates expire at the end of 2025, parties will need to sign up to participate in the proceeding to determine 2026-2030 rates by February 5, 2024 by filing a Petition to Participate.  The Petition must describe the party’s interest in the proceeding and be accompanied by a filing fee of $150.  The Federal Register notice provides other procedural details for filing these Petitions.

Once the Petitions to Participate are filed, the CRB will set out the rules and procedures to be followed in the proceeding.  Initially, there is a 90 day period in which the parties can try to settle the case.  While parties can settle at any time (subject to approval of the terms by the CRB), this initial 90-day period occurs before any litigation begins and offers parties the opportunity to avoid much of the cost of litigation.  Once that period ends without a settlement, the litigation begins.  Initial stages of the litigation (including the identification of witnesses, submission of the rate proposals and the evidence supporting those proposals, and the initial discovery) will likely all take place in 2024, with the hearing itself conducted in 2025, followed by final briefs summarizing the evidence and arguing about the conclusions to be drawn from that evidence. There are usually oral arguments held after the briefs are submitted.  At that point, the three Copyright Royalty Judges will consider the evidence and the arguments and release their decisions late in 2025, so that parties know the new rates as of January 1, 2026. While there may be appeals of the decision that are argued well beyond the effective date of the new rates, the rates become effective while those appeals are pending.Continue Reading Copyright Royalty Board Starts WEB VI Proceeding to Set Webcasting Royalties Paid to SoundExchange for 2026-2030: Petitions to Participate Due February 5

In Federal Register notices published this week, the Copyright Royalty Board announced cost-of-living increases for two sets of music royalties.  Webcasters, including broadcasters streaming their signals on the web or through mobile apps, will be paying more to SoundExchange for the public performance of sound recordings.  In addition, noncommercial broadcasters affiliated with educational institutions, but not affiliated with NPR or CPB, will be paying more to SESAC and GMR for their over-the-air broadcasts.  These changes go into effect on January 1, 2024.  More information about each of these royalties is set out below. 

The webcasting royalties that are increasing are those that are paid to SoundExchange by those webcasters making “noninteractive digital transmissions” of sound recordings (see our article here on the difference between interactive and noninteractive transmissions).  This includes broadcasters who simulcast their over-the-air programming on the internet or through mobile apps (or through other digital means including smart speakers like Alexa, see our article here).  The notice just published in the Federal Register sets out the computations that the Board used to determine the amount of the cost-of-living increase.  Those computations led to a royalty rate for 2024 of $.0025 per performance for services that do not charge a subscription fee. A performance is one song played to one listener – so for one song paid to four listeners one time each, a webcaster pays a penny. For subscription services, the rate will be $.0031 per performance.  This represents an increase from the 2023 rates of $.0024 for nonsubscription performances and $.0030 per performance for subscription stream. Continue Reading Cost of Living Increases Announced for Music Royalties Paid by Webcasters to SoundExchange and by Noncommercial Broadcasters to SESAC and GMR

Late last month, the Ask Musicians For Music Act (the “AMFM Act”) was introduced in both the House and Senate. If enacted, the AMFM Act would impose on over-the-air broadcast radio stations a performance royalty for the use of sound recordings in their programming. This is yet another bill proposing that the current royalty that requires that digital music services pay royalties both for the use of musical compositions (as already paid by broadcasters) and the sound recording (currently paid by broadcasters only for the Internet streams of their programming) be extended to cover all over-the-air broadcasts by radio stations. Extending the sound recording performance royalty to over-the-air radio has been proposed many times before (see, for instance, our articles hereherehere and here), but this is the first time that the proposal has been advanced in the current session of Congress. Similar bills were introduced last session before the 2018 elections but were never brought to a vote in either the House or the Senate – see our post here.

As we’ve written before, the royalties that broadcasters pay to ASCAP, BMI, SESAC and even GMR are paid to the composers of music (and the copyright holders in the musical compositions, usually a publishing company). Sound recording royalties are paid to the performers (and the copyright holders in the performances, usually the record labels). These are the royalties that broadcasters pay to SoundExchange when they stream their programming on the Internet. Historically, in the US, broadcasters and other businesses who play sound recordings are not subject to a performance royalty for the use of those sound recordings (except for digital audio music services who do pay sound recording performance royalties in the US), though such royalties are paid in many other countries in the world. This bill proposes to make broadcasters pay for their over-the-air performances. Under the provisions of the bill, the Copyright Royalty Board would set these royalties along with those paid by digital audio services, and the royalties would be paid to SoundExchange.
Continue Reading AMFM Act Introduced in Congress to Impose Sound Recording Performance Royalty on Broadcast Stations

In one of those year-end decisions that got lost in the holiday rush, in late November, the Copyright Royalty Board issued its final ruling on the rates to be paid to SoundExchange by “business establishment services” for the ephemeral copies of sound recordings when these music services transmit programming to their customers. We wrote about the CRB’s proposal to adopt these rules in May of last year, and our comments on the decision remain relevant to explaining this order. A slightly revised version of our May post follows.

While Copyright Royalty Board decisions on royalties for webcasters, Sirius XM and mechanical royalties get most of the attention, the CRB also sets rates paid by “business establishment services” for the “ephemeral copies” made in their music businesses. Business establishment services are the companies that provide music to businesses to play in retail stores, restaurants and other commercial establishments. These services have come a long way from the elevator music that once was so derided – and now set the mood in all sorts of businesses with formats as varied as the commercial businesses themselves.  While the rates paid by these services pay for music rights is a little off-topic for this blog, these rates are a bit unusual, so they are worth mentioning.  The Copyright Royalty Board in May announced a proposed settlement between the services that were participating in the CRB case and SoundExchange which will raise the rates gradually from the current 12.5% of revenue to 13.5% over the next 5 years, with a minimum annual fee of $20,000, up from $10,000. These rates, which apply to any company that does not negotiate direct royalties with the sound recording copyright holders, went into effect on January 1, 2019 and will be in place through 2023.
Continue Reading Copyright Royalty Board Final Decision on Rates for Business Establishment Services

What does SoundExchange do when it collects royalties from an Internet radio operator, but the operator doesn’t provide complete information about the songs that were played?  That question was raised by the Copyright Royalty Board in a Notice of Proposed Rulemaking on a proposal by SoundExchange for the distribution of such royalties, about which we wrote here

SoundExchange claims on its website that webcaster SWCast.net was shut down when SoundExchange complained to its ISP that the service was not paying royalties for the use of the music played by the site.  SWCast was an aggregator of webcast channels created by other individuals, who paid the company – allegedly for the streaming and for the royalties that were due for that streaming.  According to the SoundExchange press release, the webcaster was shut down when SoundExchange "sent a letter requesting that the hosting ISP disable access to the SWCast site."  SoundExchange’s statement says that, despite repeated attempts to engage the webcaster, SWCast neither paid royalties nor filed reports of use for the songs streamed by the service, leading to SoundExchange’s action.  As far as we know, this is the first time that SoundExchange has taken such an action. 

How did this work?  While we have not seen the letter that SoundExchange sent to the ISP, we can assume that it alleged that SWCast was infringing on copyrighted materials by not paying the required royalties.  ISPs have a safe harbor under the Digital Millennium Copyright Act, protecting them from liability for the infringement of users of their services, if the ISP does not encourage the infringement, registers an agent with the Copyright Office, and agrees to take down infringing content when properly notified by a copyright holder (see our post here).  We can only assume that SoundExchange or the copyright holders themselves notified the ISP that the material streamed by this webcaster was infringing as no royalties were being paid and, to protect itself, the ISP blocked access to the site.Continue Reading SoundExchange Claims Credit for Shutting Down Webcaster Who Was Not Paying Royalties

Last week, the Copyright Office published in the Federal Register the final decision of the Copyright Royalty Board on the statutory rates for Internet radio royalties – royalties paid by webcasters for the noninteractive streaming of sound recordings.  As we have made clear before, these are royalties that are paid in addition to the royalties paid to ASCAP, BMI and SESAC for the public performance of the musical compositions (see our memo on Using Music in Digital Media, here, that explains the difference between the sound recording and musical composition royalties).  The rates adopted by the CRB are the rates to be paid by any webcaster who has not elected alternative rates available under one of the many settlement agreements between SoundExchange and groups of webcasters, which were entered into under the Webcaster Settlement Acts.  The Final Decision corrects a few typos in the initial decision, but otherwise leaves the substantive holdings of the decision unchanged.  We described those holdings here.  While the publication of the final decision starts the clock running on filing an appeal, the new rates are unchanged from those that were in effect for 2010 for commercial webcasters who had not elected any available alternative set of rates.  Thus, these webcasters will continue to pay at the rate of $.0019 per “performance” (a performance being one listener listening to one song – e.g. if there are 100 people listening to a stream that plays 10 songs in an hour – there are 1000 performances in that hour) for the remainder of 2011.   The publication of these rates has, however, triggered a number of questions about the comparative royalties that different Internet radio services pay for streaming music on the Internet – rates summarized below.

As set out below in detail, there are significant differences in the royalties paid by different services for the 2011-2015 royalty period.  Broadcasters who are streaming their programming on the Internet pay lower per performance royalties than webcasters paying the statutory rate in the first years of the 5 year period, but higher rates at the end of the period. (See a summary of the Broadcaster royalty agreement here).  “Pureplay” webcasters, like Pandora, pay significantly lower per performance royalties than either broadcasters or those paying under the statutory rate, but are required to pay a minimum fee of 25% of the gross revenue of their entire business – ruling out these lower rates as an option for any service that has lines of business other than webcasting.  (See a summary of the Pureplay deal here).  The broadcaster deal and that which applies to the Pureplay webcasters were both arrived at pursuant to settlements reached under the two Webcaster Settlement Acts, passed in 2008 and 2009.  These allowed the groups covered by these agreements to negotiate with SoundExchange over the rates that would cover the industry for the digital noninteractive performances of sound recordings.  The statutory rates were arrived at by a decision of the Copyright Royalty Judges after litigation which took place last year.Continue Reading Final Webcasting Royalty Rates Published – A Comparison of How Much Various Services Pay

Each year, we remind webcasters about their obligations under various settlement agreements entered into with SoundExchange and under CRB decisions to make minimum payments and, in some cases, to file a Notice of Election to be covered under certain negotiated rates – all due by January 31.  All webcasters have minimum fee obligations due by January 31.  Many, though not all, Webcasters who have elected the the royalty rates set by many of the settlement agreements entered into pursuant to the Webcasters Settlement Act must also file an election notice with SoundExchange by January 31 to continue to be covered by those settlement agreements.   These agreements were entered into by groups of webcasters and SoundExchange, and allow the webcasters to pay royalties at rates lower than those rates set by the Copyright Royalty Board for 2011. 

While SoundExchange has, in the past, sent out reminders of these obligations to services that had paid in the prior year, sometimes these notices get lost, so Internet Radio operators need to remember to make these filings.  The original election forms filed under settlement agreements signed by the NAB and by Sirius XM cover the entire settlement period from 2006-2015, so no election form must be filed each year, though minimum fee payments must still be made.  Note that certain small broadcasters, who under the Broadcaster agreement need not comply with SoundExchange recordkeeping obligations, do need to file an election to certify that they still meet the standards necessary to count as a small broadcaster.  The WSA settlement agreements that cover Pureplay webcasters, Small Commercial webcasters, and certain Noncommercial Educational webcasters are all are entered into on a year-by-year basis (though, as noted below, there is a default in certain noncommercial webcasting agreements that, if you were covered in prior years, you will be continued to be covered in the current year, unless you opt out).  Thus, to continue to be covered, parties currently governed by these agreements need to file a Notice of Election to again be covered by these agreements by January 31.Continue Reading Reminder: Most Webcasters Need to File With SoundExchange Minimum Fees and Many Need A Notice of Election of Webcaster Settlement Act Rates, All By January 31

The Copyright Office today announced an extension of time for the fling of comments in its inquiry into the possibe extension of Federal Copyright protection to pre-1972 sound recordings.  We provided a details of that proceeding here.  Internet radio operators and other digital music services that play significant numbers of pre-1972 sound recordings (particularly