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New CRB royalty period approaches, but with a potential delay

If time seems to fly, consider this: A new five-year royalty period (2021-2025) for statutory payments from music streaming services to recorded music owners is approaching. The royalty period and the legal process which precedes it are nicknamed “Web V,” as it will be the fifth such royalty period regulated by the U.S. Copyright Royalty Board.

The quick news for today:

  • The lead-up proceedings, which amount to testimony and a trial before the Copyright Royalty Board (CRB), will transpire virtually, via an online video platform to be determined.
  • The CRB is requesting a delayed deadline for its ruling, from December 31 at midnight, to April 15, 2021.

Background and Detail

Streaming music services which act as online radio outlets are required to pay the owners of music recordings for the use of those recordings. This regulation is mandated by the U.S. government, overseen by the Copyright Royalty Board. The CRB sets a new royalty rate plan every five years, and oversees the collection and distribution of statutory royalty payments (which is accomplished by SoundExchange).

The previous ruling on December 31, 2015, which covered the 2016-2020 period, rattled the webcasting community, especially in the small-webcaster segment. Small webcasters actually comprised a legal category of music webcasting, protected by a Small Webcasters protection law which levied much lower royalty rates for online radio stations which met certain criteria. That law was not renewed leading up to 2016, and small webcasters did not organize a petition to renew it. The result was a partial decimation of hobby and semi-pro music webcasting in the U.S., with indies and networking platforms abruptly pulling their plugs.

With no existing provision for small webcasters, and no organized request for one, that issue appears to be off the table in this cycle.

The CRB process involves “evidentiary hearings” during which both sides of the music copyright issue present their arguments and rationales for pushing the royalty rates in one direction or the other. This breaks out in obvious ways: Streaming services want lower rates, and SoundExchange (which speaks for and advocates for the music labels) wants higher rates. It is a trial basically, and is called that, argued before the three-judge CRB. The CRB delivers it’s verdict just before the new royalty period begins.

The delay which the CRB is requesting is a coronavirus argument. If granted, the verdict would be submitted on April 15, 2021, but would have retroactive effect from January 1. As far as we can tell, that would be three and a half months of blind streaming operation, in which companies like Pandora and AccuRadio would be liable for an unknown royalty rate.

The CRP-posted order can be viewed HERE.

Brad Hill

3 Comments

  1. I believe the. main reason that there is no representation for small webcasters is that the cost of participation is so high. For the 2010 hearings, as I recall, reams and reams of paper was being shipped around to everyone as part of the process. (A few of us asked if we could just email PDFs instead, and luckily, the participants agreed to that.)

    It’s pretty much impossible for an individual to participate without being represented by a lawyer. I remember being chided by one of the clerks for “not working with counsel”.

    But big business (RIAA) only cares about other big business (SiriusXM, Pandora, etc). The small/medium sized webcasters are effectively kept out of the process. About the only way you can be a small/independent player is to become a 501(c)3 and qualify for those rates.

  2. SoundExchange claims to “be for the artists” … HA. They try to act on behalf of the major record labels – companies only. The “ceo” of SE (a “non-profit” supposedly) made $1.4M a couple of years ago according to a recent article in digital music news. Here’s an idea: Let him take about 25% of that (and still be significantly overcompensated for what he contributes) and send the remaining of those “non-profits” to the starving artists they supposedly are so fond of. When SE formed a few years back half of their whole pitch was that their involvement would stimulate “the long tail” (remember WIRED mag cover and the promise of “digital” …. FREE! everything will be FREE!!) and help new and small and unrecognized artists. Wrong. Elton John and the ceo of SE get rich and small webcasters just ….. go away.

  3. Why am I not surprised? Corporate streamers get a nice deal, while small webcasters like myself are thrown into the trash.

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