The Copyright Royalty Board (CRB) published its full determination, as expected following the very brief announcement of new webcast royalty rates on December 16. (See the full determination here.) To whatever extent small webcasters cast a hopeful wish that the complete royalty rate decision would offer some sign of a special provision for low-revenue Internet radio, that hope is dashed. In the CRB document there is one footnote mention of the phrase “small webcaster,” and a few minor references to the “Webcaster Settlement Act of 2009.”
As noted in RAIN News before, the CRB is charged only with setting a royalty rate for commercial webcasting as a whole, and not with creating special rates for groups of webcasters. So, though it was never realistic to expect a remedy for small webcasters in the CRB’s full determination, many webcasters we have spoken to did pin some hope on the release of this document, which serves as a final statementof the CRB rate ruling.
The Webcaster Settlement Act of 2009 (WSA) is the law which, among other things, protected small and mid-sized Internet radio stations by providing a percentage-of-revenue calculation for determining royalty obligation to record labels. That calculation arrived at a much less expensive royalty expense than the CRB rates for commercial webcasters set in 2005 and and 2010, each for five years. The WSA expired at midnight on December 31, and small webcasters have faced royalty expenses for 2016, and beyond, that are far beyond the affordable reach of many. An uncountable number of small and micro stations have pulled their plugs as a result. Somewhat larger streaming businesses are soldiering on, and some of those expressed hope that the full CRB determination would contain information that applied to them.
The Webcaster Settlement Act was forged from negotiations between SoundExchange (the government-sanctioned organization which collects and distributes webcast label royalties) and the music label groups. Strictly speaking the CRB’s job is to set a rate for commercial webcasting, without regard to special webcasting categories that might be arranging side deals with SoundExchange. Public radio and college radio are two such webcast groups that have negotiated special rates in the past, and did so again in the so-called Web IV process which resulted in this year’s new rate.
Participation in Web IV is expensive and highly bureaucratic, an easily understood reason why small webcasters, lacking an organized and funded advocacy group, did not participate in the arguments, legal submissions, and special requests of the CRB process.
Is it all over for small webcasters, then? Not necessarily. The Webcaster Settlement Act of 2009 was created in the middle of the Web II period, setting new rates for the remainder of Web II and all of Web III which ended on December 31. (NOTE: the WSA also documented special rates for other special webcasting categories, not only for small webcasters.) In theory, it is never impossible to negotiate a business arrangement with the music industry for streaming its records. We recently spoke with David Goldberg, and attorney representing the StreamLicensing platform which aggregates Internet radio stations, and he expressed a positive outlook.
“I do think labels, SoundExchange, everyone, sees the value in small webcasting,” he said. “I do feel there will be talks about this at some point. The landscape has changed since 2009, when the small webcaster settlement was passed. But there are reasons why everybody will want to at least talk about something.”
In the meantime, small webcasters still streaming must face an expensive licensing environment for the foreseeable future.