On March 2, 2007, the Copyright Royalty Board issued an opinion setting royalty rates for non-interactive Internet streaming of sound recordings for 2006-2010. The new rates are applicable to all services that stream sound recordings on the Internet, including radio stations that simulcast their broadcast programming over the Internet.

The new rates represent a substantial increase from the previous rates as well as a change in the manner in which royalties are to be calculated. The parties to the rate-setting proceeding have the option of petitioning for a rehearing or appealing the decision to the U.S. Court of Appeals for the D.C. Circuit.

Some of the more important features of the Board’s decision are summarized below.

The New Rates

For commercial non-interactive webcasting services operating under the 17 U.S.C. §§ 112 and 114 statutory licenses, the rates for performances of sound recordings via webcasting are:

  • 0.08 cent per listener per song in 2006
  • 0.11 cent per listener per song in 2007
  • 0.14 cent per listener per song in 2008
  • 0.18 cent per listener per song in 2009
  • 0.19 cent per listener per song in 2010

There is a minimum fee of $500 per channel or per station (each side channel or unique stream of music is a separate channel). For noncommercial, non-interactive webcasting services, including Internet simulcasts of programming broadcast by noncommercial radio stations, such as those affiliated with colleges and universities, the rate is:

  • An annual flat fee of $500 per station or per channel for the first 159,140 aggregate tuning hours (ATH) per month. (One ATH represents one hour of programming transmitted to one listener.) This ATH figure represents about 218 average concurrent listeners.
  • The commercial usage rates apply to all performances beyond the ATH limit.

These rates all include the fees for both the performance right and the so-called “ephemeral recording” right, which allows the making of server copies.

Applicability of Rates

These rates apply only to webcasters who abide by certain conditions spelled out in the statute and regulations pursuant to a statutory license. These conditions have not been affected by the recent decision. Some of the more important conditions include: webcasters must notify the Copyright Office within 45 days of the start of the service that they intend to rely on the statutory license; they must keep records of the performances they make and submit regular reports of use; they may not pre-announce specific songs; they must display the name of the artist, the song title, and, typically, the album while each song is playing; and they must comply with restrictions on the number of songs by a particular artist or from a particular album that can be played within a certain time period. For complete information on the requirements, see 37 C.F.R. Part 370 and 17 U.S.C. § 114, or consult your copyright lawyer.

Calculation of Rates

These royalties are measured on a per-listener per-song basis. In order to accurately calculate royalties, a webcaster will need to know how many listeners listened to each song it transmitted. Many webcasters have not tracked this particular information, and it is not clear if it will be acceptable to pay based on ATH multiplied by the average number of songs per hour transmitted in their webcasts.

Payment Due Dates

The regulations issued by the Board state that payment of royalties on all performances made from January 1, 2006 through March 31, 2007 is due by May 15, 2007 unless there is a rehearing or appeal, in which case the date will be extended. Payments going forward are to be made monthly, with each payment due 45 days after the end of the month in which the performances occurred (i.e., payments for performances made in April 2007 will be due 45 days after the end of April, or on June 14, 2007) regardless of whether there is a rehearing or appeal. If a rehearing or appeal alters the rates, then 60 days after the final resolution, webcasters will either receive a refund of any excess payments, or they will have to make up any underpayments.

View the full text of the Copyright Royalty Board’s decision, with the complete regulations.