performance tax

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On Tuesday, the Senate Judiciary Committee held a hearing on the possibility of imposing on broadcasters a performance royalty for the use of sound recordings.  This would be a new royalty, paying for the public performance of the recording of a song by a particular artist – a fee that would be on top of the fees that broadcasters already pay to ASCAP, BMI and SESAC for the public performance of the underlying compositions.  Unlike the House of Representatives Judiciary Committee Hearing, about which we wrote here, this hearing was a much more measured proceeding, weighing carefully the implications of imposing a new royalty – both as to whether it was really necessary to encourage creation of more music by performers, and as to whether radio stations could afford to pay such a royalty.  In fact, in closing the hearing, Senators asked the representatives of the Broadcasters and of the musicians to provide the committee more information on these two issues.

The Music First Coalition seeking the new royalty was represented by two recording artists, Lyle Lovett and Alice Peacock.  Committee members were clearly excited to have Mr. Lovett testifying, thanking him repeatedly for taking time out from his touring schedule (he had played a concert the night before in suburban Washington, at the Birchmere Club in Alexandria that Senator Leahy, Chairman of the Committee, said was attended and enjoyed by some of his staffers), and the committee was even treated to a few bars of Ms. Peacock’s song "Bliss."  But between the performances and the star treatment, committee members did ask hard questions – including whether a royalty was really needed.  Both artist stated that music was their passion, that they would be performers no matter how much they were paid.  If passion drove the creation of music, asked one Senator, as the purpose of copyright is to encourage the creation of artistic works, why is a new royalty on broadcasters even necessary?  Continue Reading Performance Royalty (or Tax) on Broadcasters – Promotion, Fairness and The Impact on the Small Guy

The Copyright Royalty Board has asked for comments on proposed royalty rates for the use of sound recordings by "Preexisting Subscription Services."  In adopting the Digital Millennium Copyright Act, Congress divided digital music services into various categories, each of which are assessed different royalties for the use of sound recordings. Preexisting subscription services were those digital subscription music services in existence as of the date of the adoption of the DMCA. Basically, these were the digital cable music services that were in operation in 1997.  In the proceeding now being resolved by a settlement between Music Choice (the one remaining service that was in existence in 1997) and SoundExchange, the companies propose a royalty of 7.25% of gross revenues of the service for the period 2008-2011, and 7.5% of gross revenues for 2012. A $100,000 minimum payment is due at the beginning of each year.  Comments on the settlement are due on November 30.  As set forth below, this settlement sets the stage for the upcoming decision on satellite radio royalty rates – as these two services are both governed by a royalty-setting standard that is different than that used for Internet radio.

The Copyright Royalty Board announced the proceeding to set the royalties for Preexisting Subscription Services at the same time as they initiated the proceeding to set new royalties for Satellite Radio Services – which were also considered to be preexisting services at the time of the adoption of the DMCA – not because they were actually operating, but as their services had been announced and construction permits to construct the satellites had been issued by the FCC.  No settlement has been reached with the satellite radio services (except as to limited "new subscription service" that XM and Sirius provide in conjunction with cable and satellite television packages where, according to the CRB website, a settlement has been reached), and a hearing was held earlier this year to take evidence on what the rates for those services should be.  As we’ve written before, SoundExchange has requested royalties that would reach 23% of a satellite radio operator’s gross revenues.  The satellite radio case has been completed, briefs filed, and oral arguments were held in October.  A decision in the case is expected before the end of the year.Continue Reading Copyright Royalty Board Asks for Comment on Music Choice Royalty – Satellite Radio is Next