December 17, 2010 at 2:21 pm

Webcasters Celebrate U.S. Copyright Board’s Royalty Rate (Non)Decision

Judges swear in to the U.S. Copyright Royalty Board (photo courtesy of the Library of Congress).

Listening to internet radio on a smartphone app or through web browser is notoriously easy, but behind the scenes, these are businesses with expenses that determine how interactive your internet radio stations can be, the number of stations you can access within each service, the amount of ads you’ll be subjected to in free versions and your overall range of listening options.

Webcasting royalty rates might be wonky Washington stuff, in other words, but it can have a real effect on your ears.

A webcaster organization including Apple, Amazon, Microsoft, Slacker, and other companies, which had feared new royalty rates set to go into effect in 2011, says it is relieved by a decision this week by the United States Copyright Royalty Board, a three-judge panel pictured above, not to implement new rates proposed by SoundExchange. Likewise, the copyright board rejected webcaster Live365′s lower rates proposal.

(SoundExchange is the non-profit organization charged with collecting and distributing performance royalties from digital and satellite music services in the absence of a direct deal between copyright holders and a streaming music service.)

Both sides were given 15 days to request a rehearing and 30 days to appeal the decision, according to the Radio and Internet Newsletter, but pursuant to the decision, SoundExchange published new internet radio royalty rates for 2011 to 1015 on Friday. Internet radio services will pay an upfront annual minimum fee of $500 per station, with a maximum of $50,000 in per-station fees, and their royalty rates (deductible from that minimum) will remain unchanged from those dictated by last year’s decision (.pdf):

2011: 0.17 cents per performance (of a song)
2012: 0.20 cents
2013: 0.22 cents
2014: 0.23 cents
2015: 0.25 cents

Webcasters said they were pleased that the CRB rejected SoundExchange’s proposal, which would have run from 0.21 cents to 0.29 cents over the same period, was not enacted. The Digital Media Alliance (DiMA) — representing Amazon, Apple, BestBuy/Napster, Live365, Microsoft, MTV Networks, Myspace Music, Nokia, RealNetworks/Rhapsody, RightsFlow, Slacker and Google’s YouTube — issued the following statement on Friday:

“DiMA are pleased that the Copyright Royalty Board did not adopt the extremely high rates proposed by SoundExchange. Over the past 10 years, webcasters have experienced a near three-fold increase in the rate they pay SoundExchange for use of sound recordings.  These dramatic increases have made it difficult for many webcasters to continue delivering the innovative services that millions of Internet radio fans have come to rely on.”

However, the webcaster group also seeks changes in the current process for setting the rates and accuses SoundExchange of rejecting its own agreed-to solutions, so it would appear that things are not entirely settled here:

“We remain dissatisfied with the process used for setting Internet radio royalty rates, which are by law based on marketplace deals. Under current rules, SoundExchange was able to unilaterally prevent the [Copyright Royalty] Board from considering numerous agreements — negotiated by SoundExchange itself — that contained rates that more fairly reflected the needs of both RIAA member companies and webcasters to operate in a reasonable business environment.”

For more on the new rates (including the rates for small and non-commercial webcasters), see SoundExchange’s detailed rate list.

Photo courtesy of the Library of Congress