CRB royalty scheme rates a lawsuit


The National Associaion of Broadcasters is joining with Bonneville International and the National Religious Broadcasters Music License Committee in challenging the rate schedule imposed by the National Copyright Board on internet music streaming. A key complaint: "The Board’s threshold ruling that terrestrial radio stations that stream their stations on the Internet ("Simulcasters") must pay a per-performance, per-listener royalty, instead of an annual flat fee royalty, was unlawful." CRB is supposed to enforce an agreement that "a willing buyer and willing seller would have negotiated in the marketplace," among other things, and the plaintiffs say they produced ample evidence that this means a flat rate fee rather than the per-performance per-listener regime CRB came up with. The lawsuit will be filed in the DC Circuit.

From NAB, four reasons the CRB decision is unlawful

Even if the Board could have justified a per-performance fee structure for Simulcasters, the Board’s determination of the precise royalty rates was unlawful for four principal reasons. First, the Board’s decision to use royalty agreements between record companies and interactive webcaster services as benchmarks was arbitrary and violated the Act’s "willing buyer/willing seller" standard. Although the statute permits the Board to look at rates and terms from market agreements involving "comparable types of digital audio transmission services," interactive services are not remotely "comparable" to the non-interactive services at issue here. Second, the Board’s brief discussion of why Simulcasters should not pay a lower per-performance rate than Internet-only webcasters was arbitrary and failed to consider the record evidence. Third, the mathematical model on which the Board relied in its attempt to adjust for indisputably significant distinctions between interactive and non-interactive services produces absurd results, and the Board’s one-sentence rejection of Simulcasters’ criticisms was patently arbitrary. Fourth, the Board did not consider the record evidence in refusing to permit Simulcasters to use the alternative "aggregate tuning hours" method for calculating royalties.