Last week, the Copyright Royalty Board announced its calculations for whether there would be a cost of living increase in the 2019 rates that Internet radio stations pay to SoundExchange for the public performance of sound recordings. In its initial release on the subject, the CRB’s announcement indicated that commercial webcasters would continue to pay at the rate of $.0018 per performance (set after a cost of living increase last year – see our post here). But that same notice indicated that the per performance rate would be $.0019 for noncommercial webcasters with substantial listening (i.e., those that stream more than the 159,140 aggregate monthly tuning hours that noncommercial webcasters receive for a $500 yearly payment), causing some concern among noncommercial webcasters as their per performance rates were supposed to be based on what commercial webcasters paid. That notice was revealed to be a typo according to a Federal Register correction published today – keeping the noncommercial rates at $.0018 once the noncommercial webcaster exceeds the initial complement of streaming hours it gets for the $500 yearly minimum payment (see our initial article on that decision here, and one that provided more details here).
While the rates stay the same for 2019, and will stay substantially the same for 2020 (subject only to a cost of living increase, if any), 2019 will begin the CRB proceeding for the setting of webcaster’s SoundExchange royalty rates for 2021-2026. The CRB sets rates in 5 year increments. But the proceedings to set those rates normally take two years to complete, so the proceeding to set the rates to be effective in 2021 will begin with interested parties filing petitions to participate in the proceeding following a CRB invitation to file, likely to be released at the beginning of 2019. Once parties have filed to participate, the CRB will announce a mandatory 90 day period in which the parties are to try to settle the case. If there is no settlement, the litigation will run through the remainder of 2019 and 2020, with a decision to be issued by the end of 2020.
One of the real questions will be who will participate in the proceeding. In the last proceeding, small commercial webcasters were not represented (see our post here) and no special rates were set for these companies. Some of the companies that litigated the last proceeding now offer on-demand services, meaning that they would have negotiated rates with the record companies (see our article here) which, in some cases, might include provisions for their noninteractive webcasting services, raising questions as to whether their participation in this proceeding will be necessary. Broadcasters presumably will participate in order to set the rates for their simulcast streaming. Noncommercial groups also are likely to participate to set rates for their streaming. Watch for the CRB announcement of the start of the case early in 2019 – and we will see what rates are set as the litigation plays out over the two years before the new rates are set to take effect on January 1, 2021.