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Rates, Rules and Regulations: Sorting Through the Webcaster Royalty Deals July 16, 2009

Posted by David W. King in Uncategorized.
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Since Congress passed the first of two Webcaster Settlement Acts in October of last year, various classes of webcasters have successfully reached settlements with SoundExchange that allow them to pay royalties at rates different than the nearly universally-criticized Copyright Royalty Board rates.

Public Radio

Announced: January 2009.

Covered Parties: Approximately 450 public radio webcasters, including CPB-supported stations, NPR and its members, National Federation of Community Broadcasters members, American Public Media, Public Radio Exchange and Public Radio International.
TERMS: Included webcasters pay a flat mass fee of $1.85 million for royalties (an average per-year, per-station cost of about $822). The included stations must also supply SoundExchange with a consolidated “usage report” detailing song and artist play for all of public radio.

OTHER NOTES: Industry attorney David Oxenford pointed out that the CPB deal does not cover royalties from 2011-2015, as the Webcaster Settlement Act allowed, thus meaning public radio stations “will be right back in a [Copyright Royalty Board] proceeding to determine royalties almost immediately.”

Commercial Broadcasters
Announced: February 2009

Covered Parties: Commercial broadcasters’ simulcasts and Internet-only online streams. Deal negotiated between SoundExchange and the National Association of Broadcasters.

Terms: Deal laid out new “per performance” rates (that is, rate paid on a per-song, per-listener basis) that were slightly lower than those set by the CRB in 2007.

SoundExchange Offer to Very Small Webcasters
Announced: February 2009

Covered Parties: Small webcasters and “microcasters.” Attention Span Radio, Blogmusik (Deezer.com), Born Again Radio, Christmas Music 24/7, Club 80’s Internet Radio, Dark Horse Productions, Edgewater Radio, Forever Cool (Forevercool.us), Indiwaves (SetYourMusicFree.com), Ludlow Media (MandarinRadio.com), Musical Justice, My Jazz Network, PartiRadio, Playa Cofi Jukebox (Tropicalglen.com), Soulsville Online, taintradio, Voice of Country, and Window To The World Communications (WFMT.com) agreed to the deal.

SoundExchange called this group “Small Webcasters,” not to be confused with such “Small Commercial Webcasters” as RadioIO, Digitally Imported and AccuRadio which had nothing to do with this agreement.

Terms: Webcasters pay 10% of total revenues up to $250,000 and 12% up until $1.25 million. After this point, webcasters must pay the CRB per-performance rates, though a 6-month grace period in which they can continue paying a percentage of revenue is included. Also, any streaming above 5 million monthly ATH would have to be paid using the CRB rates. STATUS: CLOSED: Webcasters wishing to be included in this deal must have filed a notice with SoundExchange by April 30, 2009.
The offer was based on terms similar to those in the 2002 Small Webcasters Settlement Act, in that it allowed very small webcasters to pay on a percentage-of-revenue basis, but included revenue and listening caps.

Any company buying a webcaster that had agreed to this deal must pay SoundExchange the full CRB rates for all music the webcaster played since 2006. The agreement “raises questions about fairness and equality as, if the performance royalty that SoundExchange seeks to impose on broadcasters gets Congressional traction, small webcasters under this deal would be paying more than twenty times the amount that small broadcasters with a similar amount of revenue would pay,” Oxenford writes.

“Pureplay” Webcasters
Covered Parties: Any webcaster. AccuRadio, Digitally Imported and radioIO negotiated the agreement with SoundExchange.

In Effect: 2006-2015 (2014 for small webcasters).
Terms: This deal split webcasters into three groups: Large webcasters, small webcasters and webcasters with subscription plans. Large webcasters (those with over $1.25 million in annual revenues and surpassing a monthly listener-hour cap) pay the greater of 25% of total revenues or a per-performance rate. Small webcasters pay the greater of a percentage of total revenues or a percentage of total expenses. Webcasters with subscription plans pay the same rates as those agreed upon with the NAB (see above).
Status: Open: Webcasters can elect to join this agreement until 30 days after SoundExchange publishes the deal in the Federal Register.

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