On December 14th, 2010 the Copyright Royalty Board (“CRB”) issued its decision in the Webcasting III rate setting case. A2IM has three seats on the SoundExchange board (a third of the label seats) and SoundExchange funds the rate setting proceedings on behalf of both artist and label sound recording owners.
The CRB released a 137-page opinion and, based upon our initial review, A2IM is fairly pleased with the outcome. The CRB adopted commercial rates that are in the neighborhood of the National Association of Broadcasters (“NAB”) for AM/FM digital simulcast radio rates and the Sirius/XM Satellite rates that SoundExchange had previously negotiated in 2009 (although slightly higher in the early years and slightly lower in the latter years). Below are some of the highlights:
Rates for commercial Webcasters: The CRB adopted the following rate structure for commercial Webcasters:
These rates are the general commercial rates for non-simulcasting broadcasting webcasters. The CRB found that the evidence presented shows growth in the webcasting industry which supports an increase in the rate through the term, and that because growth in the industry has occurred unevenly, the rate structure should have longer periods of rate stability instead of annual increases.
Notably, the rates set by the CRB are higher or equal to the rates in the Sirius/XM WSA Agreement, except for 2015. The Sirius/XM web rates are $.0018 (2011), $.0020 (2012), $.0021 (2013), $.0022 (2014) and $.0024 (2015).
The CRB rejected Live365’s case. Live365 had proposed a flat rate of $.0009 for every year of the term, plus a 20% discount for aggregators.
Minimum Fee for commercial Webcasters: The CRB also adopted a minimum fee of $500 per channel or station with a $50,000 cap for commercial webcasters based on the joint stipulation submitted by SoundExchange and Live365.
Adoption of NAB WSA Agreement: The CRB adopted the NAB Agreement as the basis of rates and terms for all simulcasting commercial broadcasters, as defined by the agreement. Any commercial broadcaster that webcasts during the 2011 – 2015 term must pay under the rates and terms of the NAB Agreement, which are as follows: $.0017 (2011), $.0020 (2012), $.0022 (2013), $.0023 (2014), and $.0025 (2015).
Adoption of CBI WSA Agreement: The CRB adopted the CBI Agreement as the basis of rates and terms for all noncommercial educational webcasters, as defined by the agreement. Notably, the Court rejected IBS’s objection to that settlement.
Rates for Noncommercial Webcasters: For noncommercial webcasters that do not qualify as Noncommercial Educational Webcasters under the terms of the CBI Agreement, the CRB adopted SoundExchange’s rate proposal of $500 per channel or station with an annual cap of 159,140 ATH. The $500 royalty rate also serves as the minimum fee for noncommercial webcasters. Performances in excess of the ATH cap will be paid at the per-performance rates established for commercial webcasters.
Ephemeral Rate: With respect to the ephemeral rate for both commercial and noncommercial webcasters (this is the rate allocation for the server copy of the sound recording performance of which the sound recording owner gets 100% of the allocation), the CRB adopted SoundExchange’s proposed bundled rate structure, in which 5% of the statutory royalty is attributed to the ephemeral license.
Unrelated to the above it should be noted that in 2010 SoundExchange collected over a quarter of a billion U.S. dollars across all non-terrestrial platforms (webcasting, satellite, cable television, etc.).