Webcasting Royalties: Where do we go from here? Matthew J. Astle Attorney, Wiley Rein LLP
Page 2 Two Different Copyrights The Musical Work is the composition as written by the songwriter. The Sound Recording is the recording as made by the performer.
Page 3 Sound Recording Performance Right Right to perform a sound recording by means of digital transmission Statutory license requires the copyright holders to allow use of sound recordings upon payment of a royalty
Page 4 Who has to pay the royalties? Internet-only webcasters Radio simulcasters Satellite radio Cable/satellite music services Others
Page 5 Who does not have to pay the royalties? Terrestrial Radio HD Radio Television
Page 6 Who gets the royalties?
Page 7 SoundExchange Spin-off of RIAA Collects and distributes royalties Governed by Board of artists and labels Administrative and legal expenses come out of royalties
Page 8 Previous Rates ¢ per performance OR Per ATH: ¢ per ATH for news, talk, sports ¢ per ATH for music broadcast simulcasts ¢ per ATH for Internet-only music 0.07¢ per performance Performances per hour estimated: 1.1 for news, talk, sports (=0.07¢ per ATH) 2.12 for music broadcast simulcasts (=0.84¢ per ATH) 3.15 for Internet-only music (=1.05¢ per ATH) Commercial RatesNon-commercial Rates
Page 9 Who makes the decision? The Copyright Royalty Judges were instituted by Congress in 2004 This is the third incarnation of an adjudicatory body for copyright royalties This is the first case they ever heard
Page 10 The Webcasting Case Initial statements filed October 31, 2005 Trial during Summer 2006 Rebuttal statements and trial in Fall 2006 Final decision issued March 2, 2007
Page 11 Parties to the proceeding SoundExchange Digital Media Association (including Yahoo!, AOL, Microsoft, Live365) Radio Broadcasters (including Clear Channel, Bonneville, Susquehanna) NPR Noncommercial radio broadcasters Small commercial webcasters
Page 12 Rates for Commercial Webcasters Minimum fee: $500 per channel or per station ¢ per listener per song 0.11¢ per ATH for non-music 0.92¢ per ATH for broadcast simulcast 1.23¢ per ATH for Internet-only ¢ per listener per song 0.14¢ per ATH for non-music 1.27¢ per ATH for broadcast simulcast 1.69¢ per ATH for Internet-only ¢ per listener per song ¢ per listener per song ¢ per listener per song
Page 13 Rates for Noncommercial Webcasters Annual flat fee of $500 per station or per channel for the first 159,140 aggregate tuning hours (ATH) per month. (~ 218 average concurrent listeners). Commercial usage rates apply to all performances beyond the ATH limit.
Page 14 Payment Due Dates Payments for Jan. 1, 2006 – May 31, 2007 are due July 15, 2007 Monthly payments going forward are due 45 days after the end of the month in which the performances occurred (i.e., payments for performances made in July 2007 will be due 45 days after the end of July, or on September 14, 2007
Page 15 What does it mean? Rates for 2010 are about 2 ½ times the old rates $500 per channel fee could hit certain webcasters very hard Noncommercial stations have incentive to cap audience
Page 16 Where do we go from here? Rehearing Appeal Legislation Negotiation
Page 17 Rehearing All parties petitioned for rehearing in April Judges denied rehearing motions, but did clarify ATH option for 2006 and 2007
Page 18 Appeal All services have appealed to the D.C. Circuit Process is uncertain and will take months Also filed for stay of Judges’ rates
Page 19 Legislation Commercial rates: 7.5% of revenue related to webcasting or 0.33 ¢ per ATH, at the webcaster’s choice Noncommercial rates: 1.05 times the rates paid in 2004
Page 20 SoundExchange Offer SoundExchange has offered to many noncommercial services an extension of SWSA rates (percent of revenue rate for services with small income) Other terms are not so favorable for noncommercial webcasters
The End