SoundExchange Statement: Copyright Royalty Board Issues Decision in Royalty Rate Determination Case

December 15, 2017

Statement from Richard James Burgess (A2IM CEO):

As a direct petitioner in this statutory rate setting hearing in pursuit of fairer rates for creators and labels, A2IM thanks SoundExchange and our partners: the major labels, RIAA, AFM, SAG-AFTRA, the artists’ community, and our members who participated. The CRB’s decision falls short of our objective of establishing platform parity, a willing buyer, willing seller standard, and a fair share of revenues generated for artists and labels. Nevertheless, a forty percent increase in rates is welcome and this result is a perfect example of what happens when the recorded music industry works together for the common good.

The Copyright Royalty Board (CRB) yesterday issued its decision on the determination of rates for Sirius XM’s satellite radio service, as well as for the cable and satellite television music services provided by Music Choice and Muzak, from 2018 through 2022.

The CRB increased the rates for Sirius XM by more than 40%, from 11% of revenue to 15.5% of revenue, effective January 1, 2018. Sirius XM is the only satellite radio service in the United States and reported revenues of $5 billion in 2016. By contrast, the CRB reduced the rates for Music Choice’s and Muzak’s services from 8.5% to 7.5% of revenue. SoundExchange advocated on behalf of its artists and rights owners in this rate litigation, which spanned 24 months.

“We thank the CRB for its work and appreciate their consideration of the case we laid out,” SoundExchange President and CEO Michael Huppe said. “SoundExchange is dedicated to our mission of ensuring that creators are properly recognized and compensated for the use of their work. And while the Copyright Royalty Board did not adopt the rates we proposed for Sirius XM, its ruling demonstrates an important step in the right direction toward valuing the contributions of the music creators represented by SoundExchange.”

Yesterday’s decision confirms the need to change the so-called Section 801(b) rate standards under which satellite radio and the “grandfathered” cable radio services operate, and which permit the CRB to adopt rates different than what the market would provide. As a result of that rate standard, Sirius XM has paid below-market rates for years, and the recording artists and rights owners SoundExchange represents have subsidized the company’s growth. Likewise, Music Choice and Muzak pay significantly lower rates than their non-grandfathered competitors offering the same service. SoundExchange urges Congress to establish rate standard parity so all digital services are subject to a “willing buyer/willing seller” standard.

“There’s no reason recording artists and record labels should subsidize a company as profitable as Sirius XM,” Huppe said. “Everyone should play by the same rules, and it is long past time for Congress to change the standard that currently forces music creators to subsidize flourishing companies whose success is built on top of the music.”


TAGS: 2017 A2IM CRB Sirius/XM SoundExchange