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.