An Alabama radio station recently received a notice about the new royalty rates that are payable to ReSound, the Canadian equivalent of SoundExchange, a collective set up to receive from webcasters royalties for the public performance of sound recordings and to distribute those royalties to the copyright holders (usually the labels) and the artists who recorded the songs, according to a story in today’s issue of Tom Taylor Now (a radio industry newsletter). Tom asked me why would a radio station in Alabama get this notice – shouldn’t their payments to SoundExchange take care of the royalties that they owe for their streaming? In fact, webcasters receiving these notices do need to consider their practices.
The general principle in the Internet world is that a webcaster is liable for paying music royalties for listeners where the listener is located – not where the transmitting entity may be located. The same principle applies to rights to video and other content made available through the Internet – which is why your US HBO Go or Netflix subscription may not work the next time you visit London or Tokyo and try to watch a movie on your computer in your hotel room. Rights are usually granted country by country (or sometimes by region), but in many cases rights granted in one country don’t give the Internet service acquiring those rights permission to circulate the content worldwide. Thus, many large webcasters block their streams outside the US – notably webcasters like Pandora, who pulled their non-US streams back in 2007 (see our article here that we wrote when they took that action, which reminds me how long I have been writing this blog!).
So, if a US broadcaster is streaming, and not blocking non-US IP addresses, they may be looking at requests to get paid not only from Re Sound, but also from performing rights organizations in other countries. From time to time, various UK collection agencies (for both musical compositions and for sound recordings) have requested payment from US streaming companies. A few years ago, there was a flurry of notices from a UK collection society to a few big broadcast companies that were streaming, and many were prompted to block their streams then.
Should stations be worried about these letters? The likelihood of these collection societies being able to collect against a US webcaster with no international business is beyond the scope of this Blog, as it gets into questions of international legal jurisdiction and the ability to enforce a judgment obtained outside the US in this country. Some might wonder whether a foreign music collection society would try to collect from a small webcaster with few listeners in that foreign country. But even if they cannot collect, beware of the music society that wants to try to make an example of someone to drive home the point that these international royalties are owed as, even if they ultimately can’t collect, the costs to fight an action could be significant.
The article that I wrote 7 years ago mentioned that the then-head of SoundExchange was working at that time to try to establish reciprocal arrangements with the collection societies in other countries to allow a webcaster to pay in their home country and be covered worldwide. It is my understanding that few of these agreements have been reached, so, technically, a webcasting service that is looking for worldwide coverage needs to look to several different collection societies or rightsholders individually to launch beyond the US. Where there is no statutory license, the issues are even harder to deal with, as evidenced by on-demand services like Spotify that do have international reach have rolled out their services slowly, as they need to negotiate rights from all sorts of different rightsholders in each country before launching their services.
And just out of curiosity for that station in Alabama, what would it have to pay for the public performance of sound recordings in Canada? Actually, the Canadian version of the Copyright Royalty Board, Copyright Board Canada, recently adopted a decision setting royalties at approximately 1/20th of those that webcasters pay to SoundExchange here in the United States (though that decision is being appealed). As our CRB yesterday received direct case exhibits from the parties litigating over the royalties for US webcasting for 2016-2020, maybe a reset of our royalties would be possible as that case gets litigated so that the rates would be more like those paid to ReSound in Canada. But we will just have to watch and see on that front.