It seems like every streaming company, and every financial analyst and reporter covering the media beat has been breathlessly awaiting the release of the Copyright Royalty Board’s decision on Internet Radio Royalties that will apply to noninteractive streaming companies during the years 2016-2020. Many have been predicting a decision for days. But, in a public notice released today and available on the CRB website, the CRB announced that the that the decision will be released on Wednesday. While the CRB will make the rates available on their website on Wednesday, the full decision will only go, initially, to the Librarian of Congress which oversees the administrative aspect of the CRB and reviews its decisions for legal errors, and to counsel involved in the case. Counsel will have an opportunity to review the decision to suggest that portions of the decision containing confidential business information be redacted from the public version of the decision, a version that will be released at some point in the future. So the streaming world will know by Wednesday what they will be paying in the upcoming 5-year period, barring any post-decision changes through appeals, direct licenses, or other processes.
To clarify, this decision only apples to noninteractive streaming companies – webcasters or Internet radio – where the listener cannot select the next song to be played. It does not apply to digital music companies where parties can play individual tracks on demand, or where they can save music into playlists where the songs can be replayed in the same order repeatedly. Those paying these “statutory royalties” must adhere to certain restrictions as to how often a particular song will be played, but get the rights to play any song legally released in the United States. See our article here as to why Adele could refuse to make her songs available to services like Spotify, while Pandora and other Internet radio companies could play those songs. And these royalties apply only to streams that are directed to US residents, which is why many webcasters, including Pandora, are not available in much of the world. See our article here on determining where royalties are paid for digital content. Even though limited to these particular digital music services, the decision remains very important. What happens when the decision is released, and what is next?
The Librarian’s review, conducted by the Copyright Office which is part of the Library of Congress, is a limited one. Under the current rules, the Librarian cannot overturn or change the CRB decision. Nor is it supposed to substitute its interpretation of the evidence for that of the 3 Copyright Royalty Judges. So it is not going to second-guess the actual rates. Instead, the Librarian can only make a determination as to legal issues that may have factored into the decision – and if the Judges themselves don’t choose to adopt the views of the Librarian in an amended decision, the opinion of the Librarian merely accompanies the decision on appeal to be considered by any appellate court reviewing the matter.
The parties themselves have a brief opportunity after the release of the decision to ask for reconsideration – a request that in the past has rarely ever granted but for some minor clean up edits where there was ambiguous wording or minor technical issues in the decision. After that, the decision can be appealed to the US Court of Appeals, where the burden on any appealing party is to demonstrate that the Judges reached a decision that was arbitrary and capricious – basically conclusions were reached that a reasonable person could not have reached based on the facts – or that the decision violated some legal principle. Rarely are these appeals successful (see our post here).
The filing of an appeal does not put the rates on hold – but instead they are to become effective on January 1, with the party collecting the royalties (SoundExchange) applying credits or giving refunds if the rates are later adjusted downward, or requiring a true-up from services if they are adjusted upward. That has never been necessary under the current rules.
So everyone will have to be patient a few more days until we see the decision of the CRB decision on Wednesday. Let’s hope that the CRB website is up to the challenge of handling the traffic that will be coming its way when the decision is released.