SoundExchange Remains Likeliest To Challenge CRB 2016-20 Webcasting Rate
SoundExchange remains the likeliest party in the Copyright Royalty Board’s 2016-20 noninteractive webcasting rate-setting proceeding to appeal the CRB’s ruling to the U.S. Court of Appeals for the D.C. Circuit, but other parties may also consider a challenge, music industry lawyers said in interviews. The CRB released a final version of its decision on noninteractive webcasters’ royalty payments in Monday’s Federal Register, starting the 30-day clock for parties in the proceeding to appeal the decision to the D.C. Circuit (see 1605020058). The CRB’s final ruling kept intact the rates it set in December -- 0.17 cent per performance on nonsubscription services and 0.22 cent per performance on subscription services (see 1512170063). The final ruling didn’t substantially change from a preliminary full determination the CRB released in February (see 1602120058).
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The CRB noninteractive webcasting rates deviated from all parties’ rate proposals, but SoundExchange has been vocal about its dissatisfaction with the rates via its partially successful request for a rehearing on the rate proceeding, said Fletcher Heald copyright and music licensing lawyer Kevin Goldberg. Any party in the noninteractive webcasting proceeding could conceivably challenge the ruling because “no one got exactly what they wanted,” but “there’s a good chance” SoundExchange will be the lead or sole party to challenge, said Wilkinson Barker broadcast attorney David Oxenford. Pandora and other services had sought rates below the CRB-adopted rates, but they “may well sit back and say, ‘Although it could’ve been better for us, it’s not so bad,'” said former National Music Publishers’ Association General Counsel Jay Rosenthal, a Mitchell Silberberg lawyer who represents music industry content owners. SoundExchange didn’t comment.
Judges at the D.C. Circuit would need to decide whether the CRB’s ruling was either “arbitrary and capricious” or “lacked a substantial basis in the facts” presented during the rate-setting proceeding, Oxenford said. That is a “high standard or appeal” that some parties “may not want to spend time and money fighting on if they think it’s going to be hard” to win at the D.C. Circuit, he said. SoundExchange may be more likely to challenge the CRB ruling because the CRB’s motion for rehearing standard “is definitely higher to overcome” than the D.C. Circuit’s appeal standard, Goldberg said. Other parties may choose to file an amicus brief on a filed challenge that would urge the D.C. Circuit to examine other issues related to the CRB’s ruling, which “could kick off some interesting filings,” Goldberg said.
The CRB’s ruling could be challenged on the basis of its decision to consider Pandora’s past direct licensing deals with independent music label rights consortium Merlin and independent label Naxos as benchmarks in its 2016-20 webcasting rate-setting proceeding, Rosenthal said. “It’s not a slam dunk either way,” but consideration of the direct licensing deals was the issue that generated the most controversy during the proceeding, Rosenthal said. A challenge on the direct deals issue could also reference parties’ objections to the fact that the benchmarks the CRB considered were set in the “shadow” of either the original statutory rate the judges set for in the previous 2011-15 webcasting rate-setting proceeding or the modified rates parties agreed to in 2014 under the Webcaster Settlement Act, said music industry attorney Chris Castle. The CRB was supposed to consider direct deals as a way of determining what the market royalty rate would be, so deals that reference the statutory rate ultimately puts the rate-setting process into an “iterative cycle,” Castle said.