The text of the Copyright Royalty Board decision on Internet Radio Royalties for 2016-2020 was released last Friday. While it is 203 pages long, the basis for the decision is relatively simple. As required by the Copyright Act, the Copyright Royalty Judges looked at all of the evidence presented to determine what rate a willing buyer and a willing seller would agree to in a marketplace transaction. In looking at that evidence, they decided that the best evidence for that rate was two deals actually done in the marketplace – one deal between Pandora and the independent record label organization Merlin and another between iHeartRadio and Warner Music. As these were deals for the very rates to be decided by the Judges – the rates for the public performance of sound recordings by noninteractive streaming companies – the Judges determined that these two deals best evidenced the value put on streaming royalties by actual players in the marketplace. Looking at the per song per listener rates specified in those deals, and making a few adjustments based on other consideration included in the deals (particularly in the iHeart deal), the Judges arrived at a per song per listener rate for each deal, and determined that they set the bounds of the reasonable rates for nonsubscription webcasting. Taking into account that approximately 2/3 of the music played by webcasters is from major labels like Warner as opposed to that from the independent labels such as those that were part of the Merlin group, the Judges gave the rates from the iHeart deal greater weight in determining where within the zone of reasonableness the rates should fall. Thus, the Board determined that the rate for nonsubscription, noninteractive services should be $.0017 per performance (i.e. per song per listener). This is the rate that they published back in December (about which we wrote here).
While the basis for the decision seems relatively simple, the process to get to that decision was not – and it took 203 pages for the Judges to discuss all of the issues that they weighed in coming to their conclusions. While some of those pages were dedicated to discussions of the rates for noncommercial webcasters and the terms of the payments to be made by webcasters (topics we will try to cover in a later post), the bulk of the decision was a discussion of how the Judges weighed the arguments of the parties in the case in reaching their conclusion. While no summary can cover all of the issues that went into this consideration, some of the issues covered in this decision are discussed below.
Continue Reading Looking at the Decision of the Copyright Royalty Board on Internet Radio Royalties for Commercial Webcasters – What are the Issues that the Judges Considered?