Copyright Royalty Board announces webcast royalty rates for 2011-2015

Yo, all you non-interactive webcasters thinking about your budgeting for, say, the next five years: the Copyright Royalty Board (CRB) has announced the rates and terms that will apply to your operations for the period January 1, 2011-December 31, 2015. Check out the table below for details of the CRB’s “Initial Determination of Rates and Terms in the Matter of Digital Performance Rights in Sound Recordings and Ephemeral Recordings” (Webcasting III).

In getting this decision out as quickly as it did, the CRB has managed to do two things this time around that it failed to do in the ratemaking proceeding for 2006-2010.  First, it managed to crank out a final result in a timely fashion. (By way of contrast, the deecision setting the rates for 2006-2010 (“Webcasting II”) wasn’t published in the Federal Register until May, 2007, at which point it had to be applied retroactively to the preceding 16 months or so.)  And second, the CRB appears to have achieved relative consensus. (Again by way of contrast, Webcasting II resulted in both a two-year court challenge and an attempted legislative response).

As some psychologists tell us, even a worm can learn. And that adaptive phenomenon may be at work here as well. The CRB’s ability to achieve a quick and seemingly harmonious result almost certainly derives from its previous experience. Recall that the Copyright Act mandates that royalty rates for non-interactive webcasters be based on a “willing buyer/willing seller” standard, a standard that calls for rates that “most clearly represent the rates and terms that would have been negotiated in the marketplace”.  The rate system adopted in Webcasting II was attacked as contrary to that statutory mandate.   But eventually a series of webcaster settlement agreements were struck among various sectors of the webcasting industry (including both commercial and noncommercial broadcasters), so the heavy lifting was done: those agreements, negotiated by the private parties at arms’ length, provided a mutually agreeable resolution between willing buyers and willing sellers.

That’s why we weren’t surprised to see the CRB use those settlement agreements as its starting point in Webcasting III. And we’re certainly not surprised that the CRB was able to quickly dispose of the attempts from each side to move the needle by a couple points. It doesn’t appear that either the webcasters or SoundExchange (representing the recording artists) is utterly dissatisfied with the final result – we’re certainly not hearing the outcry that greeted Webcasting II

For now that’s all we’re going to say about the proceedings themselves. If you really want to know more, you can take the time to pore over the 137 page decision. But we suspect you won’t because, like most people, you don’t really want to know how the sausage is made; you just want it on the plate in front of you. So we’ve compiled this handy chart comparing the royalty rates for the various webcaster classifications for 2011-2015. Two important notes: (1) as in previous years, there is a $500 annual minimum fee per channel which functions similar to a non-refundable deposit against payment obligations incurred under these rate structures; and (2) noncommercial rates only apply if station exceeds 159,140 ATH/month. 

 If you’re paying attention, two things jump out here. First, the CRB has taken the royalty rates found in the major WSAs and more or less applied them across the board to webcasters meeting the definition for the relevant class, whether or not the webcaster originally opted into an available WSA. (For webcasters who opted into a WSA, the WSA still takes precedence.). And second, there are fewer and fewer differences between the various classes of broadcasters.  

When you think about it, this makes sense, since the ultimate goal here is to figure out the going market rate for a performance – which suggests that there should be little to no difference across each class, although it still seems appropriate to offer a benefit (in the form of the first 159,140 ATH free) for noncommercial webcasters.

Of course, that’s not the end of the meal. A heaping helping of mandatory playlist reports still sits on your plate and, frankly, many webcasters find them pretty hard to swallow.  But you don’t have to worry about them right now. We figure you’re just about full after everything you’ve already digested, so we’ll put those away and reheat them in the very near future when we offer a refresher course on the required filings you’ll need to make throughout 2011. 

Check back here in January, in advance of the first deadline of 2011, which would be January 31, the deadline for the filing of notices of elections and annual minimum payments.