Noncommercial Streaming Rates Being

Posted on November 26th, 2014 by

Every four years, the Copyright Royalty Board (“CRB”) is tasked with setting the new rates by which all broadcasters must pay SoundExchange in order to be allowed to continue to stream their broadcasts containing music online. Since the current rate schedule is set to expire at the end of 2015, the CRB has begun the proceedings to set the rates for the next four-year cycle, which would start on Jan. 1, 2016, for commercial and non-commercial webcasters. Each category has its own proceedings. While the commercial rate proceedings are usually more contentious, the noncommercial rate proceedings are of more interest simply because of the different categories of noncommercial webcasters.

At the outset of the proceedings, multiple parties file statements outlining their proposals for rates that would apply to them and similarly situated webcasters. Some are able to reach agreements directly with SoundExchange and avoid having the CRB get involved. Others elect to go through the rate proceeding process to allow the CRB to make a determination of the rates based upon the various proposals. Not surprisingly, there are numerous groups who participate in the proceedings, representing a myriad of different webcasters: Pandora, Sirius XM, College Broadcasters, Inc., National Public Radio (NPR/CPB), and National Religious Broadcasters (NRBNMLC). SoundExchange also participates with its own proposal of rates.

The proposals this year fall into four basic categories: noncommercial educational webcasters (College Broadcasters, Inc.), religious/non-NPR/CPB noncommercial webcasters (NRBNMLC), NPR/CPB noncommercial webcasters (NPR/CPB) and the default noncommercial webcasters (SoundExchange). Only webcasters who meet the eligibility requirements for any of the first three proposals would be allowed to take advantage of those proposals. Any webcaster who is unable to meet those eligibility requirements, or chooses not to, would automatically be under the default noncommercial rates.

The College Broadcasters proposal has already been agreed to by SoundExchange and so it is essentially a done deal. The CBI proposal only applies to noncommercial educational webcasters who are defined as a webcaster that is directly operated by or is affiliated with and officially sanctioned by an educational institution (i.e. high school or college) and the operations of the station are substantially staffed by students of the institution and is not a public broadcasting entity qualified to receive funds from the Corporation for Public Broadcasting. A webcaster that is eligible for this rate would be subject to a minimum fee of $500 with the monthly allowance of 159,140 aggregate tuning hours (“ATH”) included with the fee. The departure from prior plans, however, is that these webcasters must take affirmative steps to stay at or below the 159,140 ATH monthly limit. Should the station exceed those limits in a given month, they must pay royalties on the extra hours at the default noncommercial rate. Census reporting is required except that NCE webcasters who stay below 80,000 ATH per month can pay a $100 yearly proxy fee to avoid reporting.

NPR/CPB has also proposed its own plan with flat fees that is available only to NPR affiliated stations and those that are qualified to receive funds from the Corporation for Public Broadcasting.

NRBNMLC’s proposal would be available to noncommercial webcasters who are not NPR/CPB affiliated and are not noncommercial educational webcasters student-run stations. For our purposes here, non-commercial webcasters are 501(c)(3) non-profit entities, regardless of whether the station is licensed as non-commercial by the FCC. NRBNMLC is proposing an interesting twist on the flat fee model by proposing fees starting at $500 and capping out at $1500 per channel, depending upon monthly usage.

All channels would still owe the $500 minimum fee, but for this cost, the station would get 3,504,000 ATH per year (roughly equivalent to 400 average concurrent users per 24 hours per year). The fee would then increase in $200 per year per channel increments for each additional 876,000 ATH (equivalent to 100 average concurrent users per 24 hours per year), with a cap of $1500 for any given channel. There would be no fees for going over the number of ATH except for the incremental $200 increase. What is not explained in the NRBNMLC proposal is when these payments of $200 are to be made since they are based upon annual ATH usage, rather than monthly. The NRBNMLC proposal also does not address reporting requirements but it is likely that census reporting would apply.

SoundExchange has also offered its own version of the noncommercial webcaster rates which look a lot like the ones from the prior cycle except that the per play fees have increased. There is still the $500 minimum that gets you the 159,140 ATH per month, except that if you exceed this amount, you are required to pay $0.0025 in 2016, $0.0026 in 2017, $0.0027 in 2018, $0.0028 in 2019 and $0.0029 in 2020.

We will chronicle the saga of the commercial rates in next month’s newsletter as it is a soap opera unto itself.