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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).
Continue Reading Copyright Royalty Board Announces Cost-of-Living Increase for 2023 Webcasting Royalties – Including Royalties for Broadcasters Who Simulcast Their Programming Online

Here are some of the regulatory developments of significance to broadcasters from the last week, with links to where you can go to find more information as to how these actions may affect your operations.

  • The Copyright Royalty Board (CRB) released its long-awaited decision on streaming royalties for 2021-2025, finding that the rates applicable to

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A decision was expected in December on the royalties to be paid by broadcasters and other digital media companies who stream their non-interactive audio programming on the Internet.  As we wrote at the beginning of the pandemic, the Copyright Royalty Board, which hears the arguments about the royalties to be paid to SoundExchange in a trial-type administrative hearing, had to postpone the hearing that was initially slated to begin in March.  That hearing will now begin later this month.  Because of the delays in the hearing caused by the pandemic, Congress authorized the Copyright Office to extend various statutory deadlines.  This week, the Copyright Office announced that the December deadline for a decision on webcasting royalties has been pushed until April 15, 2021.

This does not mean that the royalties themselves will not go into effect on January 1.  The current CRB proceeding is to determine the rates that will be in effect for 2021 through 2025.  The proceeding began early in 2019 (see our posts here and here).  The January 1 effective date for the new royalties remains in place, so any decision released later in 2021 will be retroactive.  In January, webcasters and other internet radio operators will pay the royalties currently in place, and there will be some mechanism for a true up of the amounts due once the decision becomes effective.  That is not unusual in the music royalty world.  Just a few months ago, the Radio Music License Committee reached an agreement with BMI on royalties that was retroactive several years.  The Copyright Royalty Board decisions themselves, even if released to the parties in December, are often not final until the next year as the public version of any CRB decision usually takes time to release, and the parties have time after a decision is released to seek edits to the decision.  The Copyright Office itself also reviews the CRB decision for legal errors.  Even after that, the decision can be appealed to the Courts, so the ultimate resolution may be unknown for years – yet parties conduct their business while waiting to see if any adjustments to fees already paid may be due at some later time.
Continue Reading Copyright Office Extends Until April Date by Which Decision on SoundExchange Royalties for 2021-2025 Must be Released

Last week, the Copyright Office published in the Federal Register the final decision of the Copyright Royalty Board on the statutory rates for Internet radio royalties – royalties paid by webcasters for the noninteractive streaming of sound recordings.  As we have made clear before, these are royalties that are paid in addition to the royalties paid to ASCAP, BMI and SESAC for the public performance of the musical compositions (see our memo on Using Music in Digital Media, here, that explains the difference between the sound recording and musical composition royalties).  The rates adopted by the CRB are the rates to be paid by any webcaster who has not elected alternative rates available under one of the many settlement agreements between SoundExchange and groups of webcasters, which were entered into under the Webcaster Settlement Acts.  The Final Decision corrects a few typos in the initial decision, but otherwise leaves the substantive holdings of the decision unchanged.  We described those holdings here.  While the publication of the final decision starts the clock running on filing an appeal, the new rates are unchanged from those that were in effect for 2010 for commercial webcasters who had not elected any available alternative set of rates.  Thus, these webcasters will continue to pay at the rate of $.0019 per “performance” (a performance being one listener listening to one song – e.g. if there are 100 people listening to a stream that plays 10 songs in an hour – there are 1000 performances in that hour) for the remainder of 2011.   The publication of these rates has, however, triggered a number of questions about the comparative royalties that different Internet radio services pay for streaming music on the Internet – rates summarized below.

As set out below in detail, there are significant differences in the royalties paid by different services for the 2011-2015 royalty period.  Broadcasters who are streaming their programming on the Internet pay lower per performance royalties than webcasters paying the statutory rate in the first years of the 5 year period, but higher rates at the end of the period. (See a summary of the Broadcaster royalty agreement here).  “Pureplay” webcasters, like Pandora, pay significantly lower per performance royalties than either broadcasters or those paying under the statutory rate, but are required to pay a minimum fee of 25% of the gross revenue of their entire business – ruling out these lower rates as an option for any service that has lines of business other than webcasting.  (See a summary of the Pureplay deal here).  The broadcaster deal and that which applies to the Pureplay webcasters were both arrived at pursuant to settlements reached under the two Webcaster Settlement Acts, passed in 2008 and 2009.  These allowed the groups covered by these agreements to negotiate with SoundExchange over the rates that would cover the industry for the digital noninteractive performances of sound recordings.  The statutory rates were arrived at by a decision of the Copyright Royalty Judges after litigation which took place last year.Continue Reading Final Webcasting Royalty Rates Published – A Comparison of How Much Various Services Pay

Dave Oxenford this week conducted a seminar on legal issues facing broadcasters in their digital media efforts.  The seminar was organized by the Michigan Association of Broadcasters, and originated before a group of broadcasters in Lansing, but was webcast live to broadcasters in ten other states.  Dave addressed a variety of legal issues for broadcasters in connection with their website operations and other digital media platforms.  These issues included a discussion of service marks and copyrights, employment matters, music on websites, the use of social media, privacy, and sponsorship disclosure.  The slides used in the Lansing presentation are available here.    During the seminar, Dave also mentioned that stations with websites featuring user-generated content, to help insulate themselves from copyright infringement that might occur in the content posted to their website by their audience, should take advantage of the registration with the Copyright Office that may provide safe harbor protection if a station follows the rules and takes down offending content when identified by a copyright holder.  The Copyright Office instructions for registration can be found here.   

One of the most common issues that arise with radio station websites is the streaming of their programming.  In August, Dave gave a presentation to the Texas Association of Broadcasters providing  a step-by-step guide to streaming issues, with a summary of the royalty rates paid by different types of streaming companies.  That summary to Internet Radio issues is available here.  Additional information about use of music on the Internet can be found in Davis Wright Tremaine’s Guide to The Basics of Music Licensing in a Digital Age.   Dave also presented this seminar at the Connecticut Broadcasters Association’s Annual Convention in Hartford on October 14.Continue Reading David Oxenford Conducts Webinar for State Broadcast Associations on Legal Issues in the Digital Media World – Including a Discussion of Ephemeral Copies of Sound Recordings

Broadcasters have a host of other legal issues that they should consider in connection with their digital presence.  At last week’s Maine Association of Broadcasters Annual Convention in Bangor, Dave Oxenford addressed these issues, including service marks and copyrights, employment matters, music on websites, the use of social media, privacy and sponsorship disclosure.  A copy of Dave’s presentation on the Legal Issues…

The four settlement agreements between SoundExchange and different groups of webcasters were published in the Federal Register today, setting the dates by which Internet radio operators need to opt into the terms of certain of these deals by filing a Notice of Election with SoundExchange.  The deals each have different opt in dates, so it…

On September 10, 2009, David Oxenford addressed the Christian Music Broadcasters’ Momentum ’09 Conference in Orlando, Florida.  Dave’ s presentation was titled 18 Issues in 18 Minutes: What a Broadcaster Should Worry About From Washington DC.  In 18 minutes, Dave discussed topics including the FCC’s proposed localism rules, sponsorship identification and noncommercial underwriting issues, contest fines, FCC technical…

The US Court of Appeals for the District of Columbia today released its decision for the most part rejecting the appeals of webcasters of the 2007 decision of the Copyright Royalty Board setting Internet Radio royalty rates for the use of sound recordings.  The Court generally upheld the Board’s decision, finding that the issues raised by the appealing parties did not show that the decision was "arbitrary and capricious" – a high standard of judicial review that the Courts accord when reviewing supposedly "expert" administrative agency decisions.  On only one issue did the Court have concerns with the CRB’s decision – that being the question of the $500 per channel minimum fees that it had required that webcasters pay.  The Court found that per channel fee, which could result in astronomical fees for some webcasters regardless of their listenership, was not supported by the record evidence, and remanded that aspect of the case to the CRB for further consideration.

The Court surprised some observers by not reaching the constitutional issue of whether the Copyright Royalty Judges were properly appointed.  As we wrote before (see our posts here and here), issues were raised by appellant Royalty Logic, contending that these Judges should be appointed by the President, and not by the Librarian of Congress.  In the recent Court decision on the CRB rates for satellite radio, where the issue had not even been raised, one Judge nevertheless wrote that he questioned the constitutionality of the CRB.  The Court here decided not to decide the issue – finding that it had been raised too late by Royalty Logic, and raised too many fundamental issues (including whether the Register of Copyrights should herself be appointed by the President, potentially invalidating many copyrights) to be decided on the minimal briefing accorded it by the parties.Continue Reading Court Rejects Webcaster Challenge to Copyright Royalty Board Decision on Internet Radio Royalties – And Does Not Rule on Constitutional Issue of CRB Appointment

In recent months, SESAC has been writing letters to broadcasters who are streaming their signals on the Internet, asking for royalties for the performance of SESAC music on their websites.  More than one broadcaster has asked me why they have any obligation to SESAC when they are already paying SoundExchange for the music that they stream.  In fact, SoundExchange and SESAC are paid for different rights, and thus the payments to SoundExchange have no impact on the obligations that are owed to SESAC.  SESAC, along with ASCAP and BMI, represent the composers of music in collecting royalties for the public performance of their compositions.  SoundExchange, on the other hand, represents the performers of the music (and the copyright holders in those performances – usually the record companies).  In the online digital world, the SoundExchange fees cover the public performance of these recordings by particular performers (referred to as "sound recordings").  For an Internet radio company, or the online stream of a terrestrial radio station, payments must be made for both the composition and the sound recording. 

To illustrate the difference between the two rights, let’s look at an example.  On a CD released a few years ago, singer Madeleine Peyroux did a cover version of the Bob Dylan song "You’re Gonna Make Me Lonesome When You Go."  For that song, the public performance of the composition (i.e. Dylan’s words and music) is licensed through SESAC.  The actual "sound recording" of Peyroux’s version of the song would be licensed through SoundExchange, with the royalties being split between Peyroux and her record label (with backing singers and musicians receiving a small share of the SoundExchange royalty). Continue Reading SoundExchange Fees Don’t Cover SESAC Obligations