2016-2020 Royalty Rate For 'Pureplay' Webcasters Rise, But Drops For Broadcast Radio Streams

Ruling Published

The COPYRIGHT ROYALTY Judges have issued their written determination in Docket No. 14-CRB-0001-WR, the Web IV rate-setting proceeding for the years 2016–2020. 

The rate for commercial subscription services in 2016 is $0.0022 per-performance. The rate for commercial nonsubscription services in 2016 is $0.0017 per-performance. The rates for the period 2017 through 2020 for both subscription and nonsubscription services shall be adjusted to reflect the increases or decreases, if any, in the general price level, as measured by the Consumer Price Index applicable to that rate year, as set forth in the regulations adopted by the Judges’ determination.

The rates for noncommercial webcasters are: $500 annually for each station or channel for all webcast transmissions totaling not more than 159,140 Aggregate Tuning Hours (ATH) in a month, for each year in the rate term. In addition, if, in any month, a noncommercial webcaster makes total transmissions in excess of 159,140 ATH on any individual channel or station, the noncommercial webcaster shall pay per-performance royalty fees for the transmissions it makes on that channel or station in excess of 159,140 ATH at the rate of $0.0017 per-performance. The rates for transmissions over 159,140 ATH per month for the period 2017 through 2020 shall be adjusted to reflect the increases or decreases, if any, in the general price level, as measured by the Consumer Price Index applicable to that rate year, as set forth in the regulations adopted by this determination.

THE WASHINGTON POST explains, "under the current rate, PANDORA and others pay 14 cents for every 100 plays, and the CRB has heard years of arguments for how that number should be adjusted in an age where radio itself is shifting rapidly. PANDORA would like to see that lowered, to around 11 cents. SOUNDEXCHANGE, a group that represents artists in digital rights matters, has been the leading voice countering PANDORA. It has proposed raising it to 25 cents -- echoing complaints from the music industry that streaming services don't pay a fair amount to artists."

The CRB's ruling does not apply to all streaming music firms equally. THE POST notes, "SPOTIFY, for example, is not affected by the decision because it uses a different model for negotiating rights. The core of a business like SPOTIFY or APPLE MUSIC's streaming lets users pick their own songs, rather than having an algorithm pick tunes based off of user preferences. 

That more radio-like business, which is known as a 'non-interactive' model, is the only kind being addressed by the WEDNESDAY ruling."

An iHEARTMEDIA spokesperson pointed out its digital streaming royalty rate actually decreased from 25 cents in 2015 to 17 cents in 2016.

The company issued the following statement, "We appreciate the attention the judges took to understand the issues and the dynamics at work.  We understand we have a responsibility to use this rate to increase volume, thereby increasing revenues paid to artists and music companies, creating a growth market and supporting services that consumers want and can afford.  

"We believe that the rates the CRB announced today will make it possible to spend more and drive more to build volume – all of which will benefit the artists, the record labels, consumers and the entire music industry.

"We look forward to working very closely with artists and our partners at the record labels to continue bringing their music to our audiences on whatever platform they want to use."

The NATIONAL ASSOCIATION OF BROADCASTERS also responded to this decrease for radio station streaming rates as opposed to "pureplay" streaming services like PANDORA. "We are reviewing the CRB decision, but are pleased that streaming rates have begun to move in the right direction. Broadcasters want to expand into new distribution platforms; the challenge has been that rates are too high for thousands of local stations. We hope today’s decision alleviates some of the rate burden and will enable more radio stations to stream music, which will benefit artists, songwriters and our millions of listeners."

“This is a balanced rate that we can work with and grow from. The new rate structure will enable continued investment by PANDORA to drive forward a thriving and vibrant future for music,” said PANDORA CEO BRIAN MCANDREWS. “Working collaboratively with partners across the music industry is a top priority as we connect listeners with music they love, and artists with their audience. This decision provides much-needed certainty for both PANDORA and the music industry. We are moving full-steam ahead with our ambitious plan to continue to build the world’s most powerful music discovery platform.”

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