CRB Releases Full Determination on Noninteractive Webcasting Rate-setting Proceeding
The Copyright Royalty Board’s full determination on the 2016-20 royalty rate-setting proceeding for noninteractive webcasters, released Friday, is largely in line with expectations of how the CRB would explain its ruling, copyright lawyers told us. Noninteractive webcasters were required to begin paying a 0.17 cent royalty per performance on nonsubscription services and a 0.22 cent royalty per performance on subscription services beginning Jan. 1, the CRB said in December when it published the rates (see 1512160076 and 1512170063).
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The CRB also said Friday it partially granted SoundExchange’s request for a rehearing in the rate proceeding, only on SoundExchange’s challenge to the auditing provisions of the rate determination that focus on services’ recoupment of royalty overpayments to the performing rights organization. CRB said it expects to issue a post-hearing determination “in the near future.” SoundExchange had been expected to challenge the CRB’s ruling after arguing in December that the new royalty rates for webcasters “do not reflect a market price for music.” Pandora lauded the CRB for denying the portion of SoundExchange’s motion specifically on the webcasting rates. The portion of the motion the CRB did grant is “limited in scope and “does not materially impact” its December ruling “in any way,” Pandora said in a statement. SoundExchange didn’t comment.
The CRB largely hewed to existing precedent in resolving rate differentiation during the webcaster proceeding. The CRB concurred with Register of Copyrights Maria Pallante on the lack of sufficient evidence to resolve the question of whether there should be a differentiated royalty rate structure that distinguishes between payments to major record labels and independent labels. Pallante declined in November to opine whether the CRB was prohibited from setting differentiated royalty rates in the webcasting rate-setting proceeding since the issue wasn’t raised while the rate-setting proceeding was still open (see 1511250049). Although the CRB wasn’t legally bound to follow Pallante’s ruling because she made no decision, the judges said “interpretation of the evidence” for and against a differentiated rate structure without proper input from all parties in the webcasting proceeding “would be capricious.” Reopening the proceeding to collect further evidence on a differentiated rate structure framework “would be improper,” the CRB said.
The CRB was right to follow Pallante in “punting on rate differentiation,” said former National Music Publishers’ Association General Counsel Jay Rosenthal, a Mitchell Silberberg lawyer who represents music industry content owners. “It would have a little bit premature” for CRB to make any determination on rate differentiation without collecting further evidence in the record, though that’s something that may yet happen at the Copyright Office level, Rosenthal said. “I think it’s a 50/50 shot that the [CO] still might say the CRB has the authority” to create a differentiated rate structure even if the CRB judges “don’t have the evidentiary support to do it,” he said.
The CRB also declined to grant NAB’s request for a rate structure specifically for simulcasts of terrestrial radio broadcasts. NAB didn’t prove “simulcasting differs not only from other forms of commercial webcasting, but also that it differs in ways that would cause willing buyers and willing sellers to agree on a lower royalty rate in the hypothetical market,” the CRB said. Most relevant evidence indicates “simulcasters and other commercial webcasters compete in the same submarket and therefore should be subject to the same rate,” the CRB said. “Granting simulcasters differential royalty treatment would distort competition in this submarket, promoting one business model at the expense of others.”