SoundExchange posts Q3 payments as it awaits CRB rate decision today

SoundExchange Q3 2015SoundExchange released its third-quarter figures for payments made and received from digital radio. The rights manager paid out $204 million in the quarter to 87,219 payees. The same quarter in 2014 saw $267 million in payments. Total payments in the year-to-date reached $591.2 million, up from $590.6 million at this point in 2014.

The timing of this release is pointed, as today the Copyright Royalty Board is slated to release its decision on the statutory royalty rates to be paid by non-interactive streaming platforms during 2016-2020. Pandora is one of the bigger players to be impacted by this ruling, but SoundExchange has just as much on the line. After all, more than 50% of SoundExchange’s royalty collections are paid by the online radio company.

Whatever the decision is, it seems entirely possible that Pandora will revamp how it handles financial obligations to eliminate statutory licensing entirely in favor of direct deals with labels; it has a few under its belt and has been on a tear of making these arrangements with publishers. Plus, with the promise of transforming Rdio’s assets into a new on-demand service, Pandora has another out from the entire system, since the CRB only governs non-interactive platforms.

If the CRB does rule for a vastly lower royalty rate, or if it picks a higher fee and drives Pandora to a new economics model, SoundExchange will take a big hit to its business.

Anna Washenko