In recent weeks, SoundExchange has begun to send letters to broadcasters who are streaming their signals on the Internet without paying their SoundExchange royalties. Despite all of the publicity about Internet radio royalties and the controversy about the rates for those royalties, there still seem to be webcasters unfamiliar with their obligations to SoundExchange. As we have written many times, SoundExchange collects royalties for the public performance of the "sound recording", a song as recorded by a particular artist. Those royalties, which are charged only to digital media companies like Internet radio, satellite radio and digital cable radio, are paid half to the copyright holder in the recording (usually the record company for most popular songs) and half to the performers on the recording. These royalties are paid in addition to the royalties paid to ASCAP, BMI and SESAC for the public performance of the musical work - the underlying musical composition, the words and music of a song - money that is paid to the composers of that musical work. So just paying ASCAP, BMI and SESAC is insufficient to cover your streaming operations when music is being used.

While these royalties have been law since 1998, and have been set by decisions first by a CARP (Copyright Arbitration Royalty Panel) in 2003, and then by the Copyright Royalty Board in 2007, it seems like some companies still have not gotten the message about the obligations to pay these fees. Thus, in the last few weeks, SoundExchange has been sending out letters to companies that have not been paying. The letter are not particularly threatening - instead pointing out the obligations that companies have to pay the royalties, and asking if the webcaster may be paying under some corporate name that is not readily apparent from the website. The letter also points the webcaster to the SoundExchange website for more information. Finally, it notes that SoundExchange represents the copyright holders for collections purposes, and notes that nothing in the polite letter waives any rights that those holders have to pursue actions for failure to pay the royalties - in other words to sue for Copyright infringement. So, gently, webcasters are reminded to pay their royalties or risk being sued for copyright infringement, with potential large penalties for playing music without the necessary licenses.

Webcasters can find much information about the royalties on the SoundExchange website. We have also written extensively on the subject. Some of our posts of particular interest include the following:

  • A summary of the meaning of these royalties, here. Note that this summary was written before many of the settlement agreements listed below were arrived at, so it mentions only the royalties set by the Copyright Royalty Judges in their 2007 decision.  
  • A summary of the provisions of the broadcaster-SoundExchange settlement setting special royalty rates for broadcasters who stream, with additional posts about the waiver of the "performance complement", allowing broadcasters to play more songs from an album or by the same artist than might otherwise be permitted,here, and a summary of recordkeeping obligations, here and here.  
  • A summary of the provisions of the Small Webcaster deal, an option for companies who, with all of their affiliates, have less than $1.25 million in annual gross revenues, allowing payments based on a percentage of revenue.  
  • A summary of the royalties for noncommercial operators, here, and special royalties for stations affiliated with the Corporation for Public Broadcasting (including NPR affiliates), here.  
  • Summaries of deals for "Pureplay webcasters", those whose only business is streaming, here, and another deal for other webcasters who do not fit these categories, here.  
  • A reminder about annual election requirements and minimum fee obligations, with links toSoundExchange forms.

Check out these posts, and other items that we have written about the SoundExchange royalties for Internet radio, here, and make sure that, if you are streaming, you are paying what you owe. SoundExchange now seems to be looking for those who have not paid, so to avoid any unpleasant legal surprises, don't get caught not being in compliance.