From the Copyright Office: All labels equal in music royalty rates

One aspect of the music licensing ruling expected from the Copyright Royalty Board (CRB) has been delivered, as an answer from the Register of Copyrights to a question posed by the CRB. The question? Whether webcasters could pay different royalty rates to major labels and non-major labels. The answer: No.

The answer from the Register of Copyright office is a “Memorandum Opinion,” not a ruling, but effectively shapes the CRB decision-making process.

The CRB was not necessarily requesting a proposed action, or signalling that it was leaning toward an unequal licensing solution. As the three-judge Board evaluates all the arguments submitted over the past year, it periodically has checked with the Register of Copyrights office for guidelines on potential parameters of the CRB’s royalty-rate ruling (called “Webcasting IV”). One key dimension of this cycle’s evaluation has been “real market” case studies, and the extent that specifics of marketplace negotiations and deals can be factored into government-set music royalty rates to labels. As such, consideration of supply-and-demand issues might naturally lead to an examination of whether lower rates for high-volume suppliers (the majors) might be appropriate.

With that question off the table, we know that the webcaster rate(s) set by the CRB for the 2016-2020 period will apply equally to all labels and label groups. The rate decision is expected within 30 days.

Pandora and SoundExchange can be viewed as the key litigants in the Webcasting IV process. Pandora is the largest webcaster, with the most to lose (from raised rates) or gain (from lowered rates). SoundExchange is the government-assigned collector and distributor of royalties on behalf of labels and artists, and SoundExchange advocates for higher rates.

“Pandora supports a uniform rate structure for all musicians,” said Dave Grimaldi, director of public affairs at Pandora. “We look forward to the certainty the CRB’s December decision will bring to the music industry, particularly as Pandora continues to improve our partnerships with music makers.”

SoundExchange also issued a response, anonymously, that neither supported nor detracted from the judgment.

“We continue to have confidence in the strength of the Web IV case we presented to the Copyright Royalty Board, whose decision is expected in December. As an organization which represents the entire recorded music industry – artists, major and independent labels – SoundExchange remains committed to working with our constituents on our shared mission: pursuing fair payment for all creators across all platforms.”