Copyright Board Raises Royalty Rates for Internet Broadcasters

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Yesterday, the US Copyright Royalty Board announced that Internet broadcasters – like the popular internet radio service Pandora – would have to start paying increased streaming royalty rates.

Internet radio services like Pandora will now have to pay 17 cents for every one hundred streams by non-subscribers, an increase from the previous 14 cents/one hundred stream policy currently in place. For subscribers, services will have to shell out 22 cents for every one hundred streams. These new rates will be enforced beginning January 1, 2016 and will run through 2020. Digital Music News estimates the new hike will cost Pandora an extra $100 million in 2016.

Other services that will be affected by the rate increase include iHeartRadio and XM.

The Future of Music Coalition CEO Casey Rae issued this statement:

These rates aren’t exactly a lump of coal. Over the past decade, we’ve seen billions of dollars in revenue generated by the explosive growth in webcasting. The new rates will allow artists and independent labels to participate in this success at a higher level. The fundamental value of popular Internet radio services comes from music creators, and we are glad this has been recognized in a healthy rate increase for non-subscription Internet radio services. Creators can feel good about how payout is structured under the statutory license, where revenue splits between artists and labels are fair and transparent, and payment to artists comes direct from SoundExchange.

We are concerned, however, that there does not appear to be a distinction in rates for small commercial webcasters. Digital music benefits from diversity, and services with more modest operations often help developing talent and niche genres find audiences while contributing to the overall revenue pool. If there isn’t an option for new entrants to perform music from a broad range of artists, we may end up with a less diverse digital landscape.

It also appears that by combining pureplay and commercial rates, incumbent broadcasters will receive a sizable reduction in royalty obligations for their digital transmissions. Commercial terrestrial radio already gets an unfair advantage due to the fact that they are not required to pay performers a dime for over-the-air broadcasts. This is in stark contrast to the rest of the developed world. Congress should take swift action to close this loophole to support a positive global balance of trade and the equitable treatment of American creators. And artists and their allies should push back on consolidated corporate FM getting yet another unfair advantage.

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