D.C.'s Royalty Rate Ruling Is Imminent

National Mall

The National Mall in Washington, DC.

The music industry awaits the Copyright Royalty Board's decision. Hundreds of millions of dollars are at stake. The Copyright Royalty Board has until next week to announce new U.S.

The Copyright Royalty Board has until next week to announce new U.S. webcasting rates but could make the announcement as soon as Friday. Given the timing of past announcements and the chance of a federal government shutdown this weekend, numerous industry sources are speculating the CRB judges will release rates before the weekend.

The announcement will be the culmination of Webcasting IV, the rate proceeding that will determine the statutory royalty rates to be paid by non-interactive Internet radio stations like Pandora for the next five years. Statutory royalties are paid by digital services to SoundExchange, the collection society that distributes the royalties to labels and artists.

The parties have argued for a range of rates. SoundExchange has proposed a starting rate of 0.25 cents per stream, significant increase over the rates from the Webcasters Settlement Act of 2009, legislation that lowered the last set of statutory rates established by the CRB. Under that settlement, Pandora currently pays 0.14 cents per stream on its ad-supported service. Pandora has proposed 0.11 cents per stream. iHeartMedia has proposed 0.05 cents per stream for simulcasts. AccuRadio proposes 0.01125 cents.

Hundreds of millions of dollars of future royalties are at stake. Pandora alone paid well over $500 million for sound recording performances over the previous four quarters. A swing in either direction will shift an enormous amount of money to either digital services or to labels and artists.

A few groups won't be affected by the CRB's decision. SoundExchange has already negotiated rates with the Corporation for Public Broadcasting and College Broadcasters Inc. And because a different rate schedule applies to satellite radio and cable radio, SiriusXM Radio, Music Choice and Muzak won't be impacted by the new webcasting rates, an exception being the online version of SiriusXM.