The Copyright Royalty Board has announced its long-awaited decision about how much radio stations will pay in streaming royalties for 2021 to 2025. The ruling in the so-called Web V proceeding will mean broadcasters will likely pay more as the CRB hiked the current rate 17% from the current $0.18 for every 100 songs streamed on on-subscription advertising-supported webcasts to $0.21.
The CRB judges also rejected an attempt by the National Association of Broadcasters to create a two-tier system, with streams that simulcast over-the-air radio stations paying a lesser rate. It is unclear how seriously the judges took the proposal. The complete decision will not be released for several weeks, and the outline made public late Friday made no mention of the NAB proposal, which had suggested that over-the-air stations pay a rate of $0.08 for every 100 songs streamed.
The increase means that station will need to “true up” on their royalties and pay any increases back to the first of the year.
In a statement the NAB said it “is looking forward to reviewing the Board’s opinion in detail. We are pleased that the Copyright Royalty Board 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.”
While some broadcasters may view the rate hike as a loss, the CRB also likely disappointed the music industry as well. SoundExchange had proposed the CRB raise the rate for non-subscription advertising-supported webcasts to $0.28 for every 100 songs streamed.
“While the rates are lower than SoundExchange and others proposed, they represent a step forward toward building a healthier music industry,” SoundExchange President/CEO Michael Huppe said in a release. “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.”
If the decision is held up, the smallest amount a broadcaster that streams will pay per year is $1,000. That is the minimum fee set by the CRB for each station or channel. That would be applied as a credit toward any additional royalty fees that licensees may incur in the same year, however.
For large radio groups with more than a hundred radio stations there is also a silver lining. The CRB said the maximum it will collect in minimum fees in any calendar year from one company is $100,000.
Noncommercial stations are also impacted by the CRB decision. The judges decided that noncommercial webcasters will need to pay $1,000 per year for each station or channel. But that rate will go up if a station has a large online audience. The CRB says noncommercial operators will need to pay an additional $0.21 for every 100 songs streamed for all digital audio transmissions in excess of 159,140 aggregate turning hours in a month per station or channel.
The judges also decided to raise the royalties on subscription services. Those will increase eight percent from their current $0.24 for every 100 songs streamed to $0.26.
The new rates will be retroactive to Jan. 1 and extend through the end of 2025. But the rates set by the CRB decision will only apply to 2021. The decision builds in automatic cost of living increases for each year based on the government’s Consumer Price Index, something that had been advocated for by SoundExchange.
Court Appeal Likely
The CRB decision had been twice delayed by the pandemic, which slowed the process. But the ruling is unlikely to be the final step. Broadcasters, webcasters, or the music industry may yet challenge the decision in federal appeals court.
“It almost always ends up in appeals court, especially when there is a significant change in the royalties,” said attorney David Oxenford. But he told Inside Radio that the when the CRB issues a unanimous decision it is rare for the appeals court to reverse the CRB. “The court doesn’t look back and try to review the entire record and substitute its judgement for the CRB’s judgement,” he explained. “It just looks to see if there is enough evidence to support the decision that the judges reached and that it’s not totally contrary to the service. That’s a hard burden to overcome.”
This is a developing story. Watch for updates on InsideRadio.com.