In a Federal Register notice published today, the Copyright Royalty Board announced cost-of-living increases in the statutory royalties paid by webcasters for the public performance of sound recordings.  These are the royalties paid to SoundExchange by those making noninteractive digital transmissions of sound recordings.  This included 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 CRB notice 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 2023 of $.0024 per performance for services that do not charge a subscription fee.  For subscription services, the rate will be $.0030 per performance.  A performance is one song played to one listener – so for one song paid to four listeners one time each, a webcaster pays about a penny.

Given the rate of inflation in the general economy, it is perhaps no surprise that the rates for 2023 represent a substantial increase from the royalties paid last year, and from those that were in place in 2021, the first year of the current 5-year royalty period.  As we wrote here, when the CRB decided on the rates for 2021-2025, the nonsubscription rate was $.0021 per performance.  But the CRB provided for cost of living increases.  That led to rates in 2022 for commercial webcasters, including broadcasters streaming their programming on the internet, of $.0022 per performance for a nonsubscription transmission and $.0028 per performance for a subscription transmission (see our article here mentioning the 2022 increase).

A couple of points are worth noting.  First, while these rates are effective, the 2021 decision of the CRB which set the rates is still being appealed.  Among the points raised on appeal is the NAB’s contention that broadcasters who simulcast should pay less than other webcasters, particularly those webcasters who offer some degree of listener influence on their program streams (see our article here describing how these webcasting royalties, though they apply only to “noninteractive” webcasting, do allow some degree of listener influence  as long as that influence does not allow listeners to pick the songs that they will hear on the service).  SoundExchange, on the other hand, is arguing that the royalties should be even higher.  Reply briefs in the case are due at the end of next week, with oral arguments to follow at some point next year, so that a decision will likely not be reached until late in 2023.  While the appeal is pending, webcasters continue to pay the royalties set by the CRB, with an adjustment due should the appeal result in any changes in the rates that were set by the CRB.

It is also worth noting that these increases also apply to noncommercial webcasters who exceed the monthly allotment of 159,140 aggregate tuning hours (a “tuning hour” is one listener listening to one hour of music programming) that any channel provided by a noncommercial webcaster gets for the minimum annual $1,000 fee.  However, many noncommercial webcasters, including those affiliated with NPR or CPB and those affiliated with educational institutions, are covered by other royalty settlements that don’t involve per performance fees, so they are not affected by this cost-of-living increase.  The National Religious Broadcasters Noncommercial Music Licensing Committee, who represents many of the noncommercial webcasters who are subject to the cost-of-living increase, is also a party to the pending appeal.

Webcasters need to take these new higher royalties into account in computing what they owe to SoundExchange for all streaming done in 2023.  While royalties for January streaming reflecting these new royalties are not due until 45 days after the end of the month (though annual minimum fees for most webcasters are due by January 31), webcasters need to anticipate these royalties in their budgeting for the new year, and adjust their accounting systems to account for these royalties starting January 1.