CRB determines rates for online radio not covered by Webcaster Settlement Act

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The Copyright Royalty Board (CRB) on 12/15 released its Determination of Rates for non-interactive webcasting services for the period from 2011-2015. These rates will form the default rates for webcasters who have not opted into one of the agreements negotiated last year under the Webcaster Settlement Act (note that most webcasters are already covered, including commercial broadcasters, small webcasters, Pandora and Public Radio stations). But for the rest, CRB set the following per performance royalty rates as the default rates for webcasters who are not terrestrial broadcasters:


•2011 – $.0019 per performance
•2012 – $.0021 per performance
•2013 – $.0021 per performance
•2014 – $.0023 per performance
•2015 – $.0023 per performance

Thus, the rates for this coming year will remain at the same level at which they are now set for 2010, and will increase slightly every other year.  A performance is one song played to one listener.

The decision also adopted default rates for noncommercial webcasters, setting those rates at the levels agreed to in a settlement between SoundExchange and certain noncommercial educational webcasters reached last year. Those rates establish a minimum fee of $500 for each individual channel offered by a noncommercial webcaster. If the listening on any channel exceeds 159,140 Aggregate Tuning Hours in any month, the webcaster would pay for such overage on a per performance basis at the following rates:

•2011 – $.0017 per performance
•2012 – $.0020 per performance
•2013 – $.0022 per performance
•2014 – $.0023 per performance
•2015 – $.0025 per performance

The Board also set default rates for broadcasters who are streaming, but who had not opted into the NAB SoundExchange settlement agreement entered into in 2009. The rates for broadcasters are identical to those that apply to broadcasters who did opt into that agreement:

•2011 – $.0017 per performance
•2012 – $.0020 per performance
•2013 – $.0022 per performance
•2014 – $.0023 per performance
•2015 – $.0025 per performance

Said Davis Wright Tremaine’s David Oxenford on his Broadcast Law Blog, who acted as co-counsel to Live365 in this proceeding:
“As most commercial webcasters had opted into settlement agreements, only Live365 litigated the commercial royalty rates in this proceeding against SoundExchange. As in the Webcasting II proceeding decided in 2007, the Judges were to reach a decision based on the standard of what a willing buyer and a willing seller would agree to in a hypothetical marketplace.

In reaching its decision in the case, the Copyright Royalty Judges rejected Live365’s proposed rates of $.0009 per performance, finding that the expert testimony that it had relied on, which advanced a model based on the performance of an average webcaster who would want to receive a 20% rate of return (comparable to that achieved by broadcast companies), was not supported by sufficient evidence as to what the typical costs of webcast operations were, nor as to why a hypothtical webcaster in a willing buyer-willing seller model would need to achieve that specific rate of return in order to agree on a particular level of royalty payment.

The Judges also rejected SoundExchange’s proposed rates.  It had advanced a proposal for rates beginning at $.0021 in 2011, and increasing yearly by $.0002 to reach a level of $.0029 in 2015. SoundExchange relied on an expert who took the rates that music services paid for music in the interactive marketplace (where royalties are agreed to in voluntary negotiations between record companies and users, not by a statutory royalty set by the government), and adjusted those rates to determine what he thought would be the rates that were paid without the interactivity. The expert suggested that these would lead to rates as high as $.0036 per performance. The Judges determined that this estimate was too high for several reasons, including the fact that the interactive marketplace was purely a subscription marketplace, and SoundExchange’s expert had not adjusted for the fact that the noninteractive market is primarily a nonsubscription marketplace.

After finding that these two models did not accurately reflect the current marketplace, the Judges turned to the rates negotiated in Webcaster Settlement Act (“WSA”) agreements between SoundExchange and the NAB and Sirius XM (for its webcasting services). The Judges looked at those rates as providing a good indication of what a willing buyer and a willing seller would agree to in a hypothetical marketplace, as these rates represented real deals done by players with somewhat equal market power. Under the terms of the WSA, the Judges were able to consider WSA settlement agreements only where the parties to the agreements had agreed that their terms could be used as precedent. 

SoundExchange, the NAB and Sirius XM agreed to the use of their agreements as precedent.  The Pureplay Agreement did not contain terms allowing the lower per-performance rates set out in that agreement to be used as precedent, so the Judges could not consider those lower rates.

The Judges determined that the current rate for 2010 set the lower bound of where the new rates should begin, and felt that some modest increases over time were justified by increased advertising revenues, increased listening, and increased performances being made by webcasters. Thus, the rates were increased at the levels set out above.  The Judges did not consider whether the profits of webcasting companies were also increasing.

Parties have 15 days to seek a rehearing, and 30 days from the publication of the decision in the Federal Register to seek an appeal from the US Court of Appeals. The new rates do become effective while an appeal is pending but, as the rates for 2011 remain at the levels currently in place for 2010, that should not be an immediate issue for parties affected by this decision.”


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Carl has been with RBR-TVBR since 1997 and is currently Managing Director/Senior Editor. Residing in Northern Virginia, he covers the business of broadcasting, advertising, programming, new media and engineering. He’s also done a great deal of interviews for the company and handles our ever-growing stable of bylined columnists.