Webcast Royalty Rates

Andrew Raff
March 7, 2007

Last week, the Copyright Royalty Board issued its ruling on webacsting royalty rates for those non-interactive webcasters who are subject to the §114 compulsory license. In re: Digital Performance Right in Sound Recordings and Ephemeral Recordings, No. 2005-1 CRB DTRA. This ruling will significantly increase the cost of licensing for webcasters.

The parties involved in the rate setting procedure include:

  1. The Digital Media Association and certain of its member companies that participated in this proceeding, namely: America Online, Inc. (“AOL”), Yahoo!, Inc. (Yahoo!”), Microsoft, Inc. (“Microsoft”), and Live365, Inc. (“Live 365”)
  2. Radio Broadcasters Bonneville International Corp., Clear Channel Communications, Inc., National Religious Broadcasters Music License Committee (“NRBMLC”), Susquehanna Radio Corp.
  3. SBR Creative Media, Inc. (“SBR”) and the “Small Commercial Webcasters” (this designation was adopted by the parties): namely, AccuRadio, LLC, Digitally Imported, Inc., Radioio.com LLC, Discombobulated, LLC, 3WK, LLC, Radio Paradise, Inc.
  4. National Public Radio, Inc. (“NPR”), Corporation for Public Broadcasting-Qualified Stations (“CPB”), National Religious Broadcasters Noncommercial Music License Committee (“NRBNMLC”), Collegiate Broadcasters, Inc. (“CBI”), Intercollegiate Broadcasting System, Inc., (“IBS”), and Harvard Radio Broadcasting, Inc. (“WHRB”)
  5. Royalty Logic, Inc. (“RLI”)
  6. SoundExchange, Inc. (“SoundExchange”)

One of the better summaries comes from RAIN: Webcast royalty rate decision announced: "The royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of total revenues. "

David Oxenford, Broadcast Law Blog Copyright Royalty Board Releases Decision - Rates are Going Up Significantly: "In a 100 page decision, the Board essentially adopted the royalty rate advanced by SoundExchange (the collective that receives the royalties and distributes the money to copyright holders and performers) in the litigation. It denied all proposals for a percentage of revenue royalty (including a proposal that SoundExchange itself advanced). The Board also rejected any premium for streams received by a wireless service, as SoundExchange had suggested"

David Oxenford, Broadcast Law Blog: More on the Copyright Royalty Board Decision on Internet Radio Music Royalties (another excellent summary of the Royalty Board decisions) and What Next for Internet Radio In Light of the Copyright Royalty Board Decision

Business Week: The Last Days of Internet Radio?: "Here's what the change will mean for AccuRadio. The station employs six full-time staff members and records about $500,000 in annual sales, mostly from advertising. Of that, Hanson pays record labels about $50,000 in royalty fees. The rule change, which will impose fees retroactively, will jack up royalty fees to more than $600,000 for 2006. Other Webcasters will be in the same boat."

LA Times: Internet radio stations face fee hike "Broadcast radio stations that also stream their programs online, such as KCRW in Santa Monica, said they might have to scale back on webcasting, and operators of Internet-only radio stations said the new fees would probably force them to go silent."

If the royalty rates are set so high that webcasters cannot afford to operate and pay artists, the webcast royalty pool may end up smaller than it is currently.

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