When a reader and pureplay station operator sent us a government notice of SoundExchange’s intent to audit the streaming royalty payments made by Live365, iHeartMedia, and CBS Radio for 2011, 2012, and 2013, we turned to broadcast law attorney David Oxenford (author of the deeply informative Broadcast Law Blog) to find out how significant the action is.
The auditing process is standard and regulated by government rules, according to Oxenford, who added that a number of smaller webcasters received notices earlier this week. SoundExchange, which collects streaming royalties on behalf of labels and performing artists, is permitted to audit streaming music companies, going back three years. SoundExchange filed its auding notices in December, giving it the right to reach back to 2011. SoundExchange must notify the Copyright Royalty Board (CRB) of its auditing plan, and the CRB posts its notification publicly. (Here is the Live365 post.)
David Oxenford told RAIN News that SoundExchange pays for the audit … unless it goes badly for the streaming company. If the audit reveals that the streamer underpaid by 10% or more, the bill shifts to the streaming company.
In the case of Live365 (and other station hosting platforms), the burden of reporting, complying, paying, and documenting lies with the platform, not the individual stations.
All in all, the rash of notices coming from the CRB this week add up to standard annual procedure — somebody gets audited every year. David Oxenford did note an unpredictable element to these audits: “Each audit can take on a life of its own as there can be different issues raised by the auditor in the case of different services, or there can be no issues at all.”