In recent weeks, SoundExchange has begun to send letters to broadcasters who are streaming their signals on the Internet without paying their SoundExchange royalties. Despite all of the publicity about Internet radio royalties and the controversy about the rates for those royalties, there still seem to be webcasters unfamiliar with their obligations to SoundExchange. As we have written many times, SoundExchange collects royalties for the public performance of the "sound recording", a song as recorded by a particular artist. Those royalties, which are charged only to digital media companies like Internet radio, satellite radio and digital cable radio, are paid half to the copyright holder in the recording (usually the record company for most popular songs) and half to the performers on the recording. These royalties are paid in addition to the royalties paid to ASCAP, BMI and SESAC for the public performance of the musical work – the underlying musical composition, the words and music of a song – money that is paid to the composers of that musical work. So just paying ASCAP, BMI and SESAC is insufficient to cover your streaming operations when music is being used.
While these royalties have been law since 1998, and have been set by decisions first by a CARP (Copyright Arbitration Royalty Panel) in 2003, and then by the Copyright Royalty Board in 2007, it seems like some companies still have not gotten the message about the obligations to pay these fees. Thus, in the last few weeks, SoundExchange has been sending out letters to companies that have not been paying. The letter are not particularly threatening – instead pointing out the obligations that companies have to pay the royalties, and asking if the webcaster may be paying under some corporate name that is not readily apparent from the website. The letter also points the webcaster to the SoundExchange website for more information. Finally, it notes that SoundExchange represents the copyright holders for collections purposes, and notes that nothing in the polite letter waives any rights that those holders have to pursue actions for failure to pay the royalties – in other words to sue for Copyright infringement. So, gently, webcasters are reminded to pay their royalties or risk being sued for copyright infringement, with potential large penalties for playing music without the necessary licenses.