Copyright Royalty Board Sets 2016-2020 Rates

Posted on December 31st, 2015 by

As we reported a few months ago, the Copyright Royalty Board (“CRB”) has been busy trying to decide how much services that stream music over the internet must pay in royalties to SoundExchange for the period starting in 2016. Just in the nick of time, the CRB has released its decision and rules.

The biggest change from prior years is that the overall rates have gone down. This is particularly newsworthy since SoundExchange was pushing hard for higher rates plus a cut of profits. Perhaps the years of complaints from smaller entities getting squeezed by these fees finally landed on not as deaf ears. With the lower overall rates, however, the prior sub-categories of special groups (broadcasters, small broadcasters, microcasters, small webcasters, etc.) have all been eliminated. This is not very surprising given that these categories and their special rates or terms were created to give these groups a little bit of a break from the default rate load. Now that the rates for all non-subscription services, commercial or non-commercial is $0.0017 per play, there is no need for these categories.

What has remained is the distinction between a commercial and non-commercial webcaster. Non-commercial webcasters are still defined as entities that are 501(c)(3) tax-exempt organizations or states or governmental entities who stream at least one non-subscription channel. Non-commercial webcasters will still pay the minimum $500 fee (by January 31, 2016 – or within 45 days of beginning to stream) which gets them 159,140 Aggregate Tuning Hours’ worth of plays per month. Anything in excess of the 159,140 ATH will be charged at the commercial rate of $0.0017.

Commercial webcasters must still pay the $500 fee (again by January 31, 2016) but they do not get the monthly allotment of tuning hours. The $0.0017 rate kicks in from the first play. While it is very possible for a non-commercial webcaster to pay only $500 for the year of streaming, commercial webcasters will pay at a minimum $500 and the bill will go up from there depending upon performances.

Non-commercial educational webcasters who have stations that are directly operated by or are affiliated with domestically accredited school, college or other post-secondary degree-granting educational institution and are staffed substantially by students enrolled at said school, are governed by a separate agreement between College Broadcasters, Inc. and SoundExchange. These webcasters will pay the same $500 fee and get the 159,140 ATH per month. However, they have an affirmative obligation to make good faith efforts to stay under the 159,140ATH each month. Should they go over, the noncommercial rate pf $0.0017 per play will apply. Non-commercial educational webcasters also have the option of paying $100 per year to SoundExchange to not have to do census reporting.

In the years 2017 through 2020, the rates will be tied to the annual Consumer Price Index (CPI-U) of the prior year. Each year, at least 25 days before January 1, the CRB will publish the adjusted rates in the Federal Register which will then take effect on January 1. This is a massive departure from the prior years’ schemes that laid out of the fees per year ahead of time.

It is very likely that SoundExchange will appeal some if not all of the new rate scheme. For the meantime, however, these rates will take effect on January 1, 2016 and all webcasters must file their statement of use and minimum payments of $500 per channel to SoundExchange no later than January 31, 2016.