webcasting royalties for noncommercial broadcasters

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The Copyright Royalty Board decision on the rates to be paid in the next 5 years by webcasters, including broadcasters who simulcast their programming on the internet, to SoundExchange for the digital public performance of sound recordings is supposed to be released by June 14.  These royalties are collected by SoundExchange from noninteractive webcasters (see our articles here, here and here on the difference between interactive and non-interactive webcasters) and are distributed to the artists who perform on recordings and to the copyright holders of those recordings – usually the record labels.  The CRB sets these rates in 5-year increments.  The rates at issue in the current proceeding are for 2021-2025.  As we wrote here and here, these rates would normally have been determined before the end of the last rate period at the end of 2020 but, as the trial to determine the rates was postponed by the pandemic, the CRB has been given to June 14 to announce the new royalties, presumably to be made retroactive to January 1.

The proposals made in this proceeding vary widely.  SoundExchange and its associated record labels are arguing that the rates should substantially increase, from their current level of $.0018 per performance (per song per listener – see our article here) for nonsubscription streams to rates of $.0028 per performance for 2021, with cost of living increases each succeeding year.  For subscription webcasting, SoundExchange proposes that the rates increase from $.0024 to $.0031.  In these cases, each party makes arguments as to what a willing buyer and willing seller would pay in a marketplace transaction for such rights.  The parties introduce expert witnesses to testify as to what that rate would be, usually by looking at other similar marketplace transactions.  To arrive at its proposed rates, SoundExchange introduced experts who looked at the market price for the use of music by interactive services.  These prices are set by direct negotiations.  From those prices, the experts attempted to calculate an appropriate adjustment to remove the value of the interactivity to determine the rates that a noninteractive service would pay.  This proposed increase in royalties was, of course, countered by representatives of the services who will pay the royalties to SoundExchange.
Continue Reading Copyright Royalty Board Decision on Webcasting Royalties Expected by June 14 – What Will the Streaming Rates for 2021-2025 Be?

Many Webcasters who have elected the the royalty rates set by many of the settlement agreements entered into pursuant to the Webcasters Settlement Act must file an election notice with SoundExchange by January 31 to continue to be covered by those settlement agreements.   These agreements were entered into by groups of webcasters and SoundExchange, and allow the webcasters to pay royalties at rates lower than those rates set by the Copyright Royalty Board for 2006-2010.  January 31 is an important date even for those webcasters who are covered by agreements that don’t demand an annual election, as most Internet radio operators must make annual minimum fee payments by January 31.  SoundExchange does not send out reminders of these obligations, so Internet Radio operators must remember to make these filings on their own.  The original election forms filed under settlement agreements signed by the NAB and by Sirius XM cover the entire settlement period from 2006-2015, so no election form must be filed each year, though minimum fee payments must still be made.  Note that certain small broadcasters, who need not meet SoundExchange recordkeeping obligations, do need to file an election to certify that they still meet the standards necessary to count as a small broadcaster.  The WSA settlement agreements that cover Pureplay webcasters, Small Commercial webcasters, Noncommercial Educational webcasters and other noncommercial webcasters all are entered into on a year-by-year basis.  Thus, to continue to be covered, parties currently governed by these agreements need to file a Notice of Election to again be covered by these agreements by January 31 (though note that the SoundExchange website provides for filings by February 1, presumably as January 31 is a Sunday).

The election forms are available on the SoundExchange website, though they are not easy to find. The forms that must accompany the annual minimum fees are also on the SoundExchange website.  Note that in some cases there are forms that cover both webcasters who paying under a particular settlement, as well as under the special provisions for small entities that are covered by these same agreements (e.g. Small Pureplay webcasters file a different form than other Pureplay Webcasters even though both are governed by the same agreement.  Similarly Small Broadcasters file a form different than other broadcasters, though both are covered by the same agreement).  These forms can be found at the links below.  Click on the name of the category of webcasters for a link to our article that summarizes the particular settlement, the minimum fees required, and the qualifications for small webcasters under that deal (if there is such a provision):

Note that there is no specific form for NPR affiliates covered under the NPR settlement, as an organization set up by the Corporation for Public Broadcasting handles all payments and SoundExchange filings.  Other companies providing Internet radio services need to pay attention to these dates – and file the necessary papers and make the required payments by the upcoming deadline. Continue Reading Reminder: Many Webcasters Have to Make Annual Election of SoundExchange Royalty Rates and Minimum Fee Payments By January 31, 2010

Noncommercial webcasters were provided with two royalty options under settlements reached with SoundExchange pursuant to the Webcaster Settlement Act of 2009 ("WSA").  One settlement was with Noncommercial Educational Webcasters.  The other, when announced, was characterized by SoundExchange as being a settlement with noncommercial religious broadcasters, though it applies to any noncommercial webcaster who elects to be subject to its terms.  As set forth below, except for certain mid-sized noncommercial webcasters who have more forgiving recordkeeping options under the Educational deal, it would seem that the settlement with the religious broadcasters provides far more advantageous terms, and it also reaches back to cover the period from 2006 through 2010.  The Educational webcasters agreement covers only the rates for the periods from 2011-2015.  These settlements provide another example of the issue raised before the Senate Judiciary Committee of the arbitrary nature of the precedential nature that will be accorded to WSA settlements in future webcasting proceedings.  The noncommercial agreement with significantly higer prices has been accorded precedential weight in future CRB proceedings, while the one with lower rates is, by its terms, not precedential in future proceedings.

It is easiest to start with a review of the ‘Religious" broadcaters settlement (which, as we said above, is open to any noncommecial webcaster).  The agreement provides for a $500 per channel fee for each channel or stream offered by the noncommercial webcaster.  For that flat fee of $500 per channel, the webcaster can stream up to 159,140 monthly aggregate tuning hours of programming on each stream.  An Aggregate Tuning Hour ("ATH") is one hour of programming streamed to one person.  Thus, if you have 2 people who each listen for an hour, you would have two aggegate tuning hours.  A station with 2 listeners who each listen for half an hour would have one ATH of listening.  4 listeners for 15 minutes each would also add up to one ATH.  The 159,140 monthly ATH number represents listening of approximately 221 average simultaneous listeners 24 hours a day, 7 days a week.  If a webcaster exceeds this listening level, it must pay for excess listening on a per performance (per song per listener) basis, at the rates set out below.Continue Reading Details of Webcasting Royalty Settlements for Noncommercial Webcasters Including Educational and Religious Internet Radio Operators