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CRB Sets Royalty Rate for Pandora, iHeartRadio and Other Webcasters

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The Copyright Royalty Board on Friday (June 11) granted sound recording licensees a royalty rate increase for 2021-2025 for programmed song plays. While slightly less than what SoundExchange and others had wanted, the Web V ruling ignored digital broadcasters’ petition for big rate decreases.

As it is, the CRB set a rate of $0.0026 per performance for commercial webcasters' programmed streams and $0.0021 per stream for ad-supported non-subscription services. The rates apply to programmed music webcasters like Pandora and iHeartRadio, and web simulcasts of terrestrial radio programmed music, but does not impact interactive on-demand services like Spotify. For the prior term through the end of 2020, the rates had been $0.0024 for paid subscription services and $0.0018 for ad-supported services.

SoundExchange had been seeking a rate increase to $0.0031 for paid services and $0.0024 for ad-supported services. Meanwhile, Pandora wanted rates cut, respectively to $0.0011 and $0.0008, while the National Assn. of Broadcasters wanted both ad-supported and paid services rates cut to $0.0016; and Google/YouTube wanted a floor rate of $0.0013, except programmed streams played on non-portable devices like a desktop computer would only pay $0.0007 per song play.

"This CRB decision means that creators will be compensated more fairly when their recordings are played on digital music services," SoundExchange president/CEO Michael Huppe said in a statement. "While the rates are lower than SoundExchange and others proposed, they represent a step forward toward building a healthier music industry. The decision reflects the compelling case made by SoundExchange and our allies that we need to close the gap between what artists and rights holders have been paid and what they should be paid for their work. We haven't fully closed that gap, but today is a step in the right direction."

In another aspect of the ruling, the CRB said that 5% of the royalties collected would be applied to the ephemeral license, i.e. for copies created for facilitating a song's broadcast.

The CRB also set a cost-of-living increase formula pegged to the consumer price index. Finally, it set a fee of $1,000 per year for non-commercial for each channel or station, and $0.0021 for all song transmissions in excess of 159,140 ATH (aggregate tuning hours) per month. Meanwhile, commercial webcasters must pay an annual minimum non-refundable fee of $100,000.

In a statement, the NAB said it was "looking forward to reviewing the Board’s opinion in detail" and that it was pleased that the CRB "did not adopt SoundExchange’s aggressive and deeply flawed proposal to effectively reinstate the old rates for ad-supported services. Once we review the decision we can then determine any next steps."

Speaking further on fair pay for the recorded music industry, Huppe added in a statement that "SoundExchange is committed to the principle that artists and rights holders should be respected for their work. That includes when their music is played on FM/AM radio. The music industry is in a state of transformation, and that means each player in the industry – creator and streaming platforms alike – need to evolve, as well."