Copyright Royalty Board Raises Rates on Internet Broadcasters

22 Dec 2015 | Author: | No comments yet »

A music copyright ruling has managed to make both Pandora and record labels happy—mostly.

Pandora will have to pay record labels more money for streaming their music: The Copyright Royalty Board decided on Wednesday that the company and other ad-supported non-interactive streaming services like it will have to pay $0.0017 per song streamed to consumers, or $1.70 for every thousand streamed songs. Rates for free streams, such as those supported by advertising were set at 0.17 cents per stream for 2016, a 21.4 percent increase from the current rate of 0.14 cents. IHRT 29.41 % and others that rely on compulsory, government-issued licenses for music will pay 17 cents for every 100 times their free Internet-radio users listen to a given song, and 22 cents per 100 listens by paying subscribers to ad-free radio offerings such as Pandora’s $5-a-month Pandora One. While the royalties cost for streaming songs on a subscription platform has dipped a bit, the cost for streaming songs on the more popular ad-supported free-user platform is now higher.

SoundExchange expressed disappointment with the ruling in a statement published on its website Wednesday afternoon: “We believe the rates set by the CRB do not reflect a market price for music and will erode the value of music in our economy. Services such as Pandora and Slacker have a premium service that removes advertisements for a fee, and the streams from these paying customers just became more attractive. But all in all, the rate increase is not as dramatic as it could have been: SoundExchange, the royalty distribution platform that represents artists and record labels, had asked the CRB for a rate of $0.0025.

Rather than decide rates for each year from 2016 to 2020, the CRB will adjust, from 2017 to 2020, each rate according to the change in the Consumer Price Index. It also had pushed for these services to pay a single rate, regardless of whether a song was played by a listener using the service for free or by a paying subscriber.

Pandora has already inked deals with BMG, Sony/ATV and Warner/Chappell amongst others, and is looking to use these new deals to add a Spotify-like on-demand music subscription tier to its service next year. It’s been gearing up for a potential CRB rate hike for a while now, as Wired notes, signing new agreements left and right with music publishers to get in their good graces. Despite years of legal wrangling, Pandora had been prepared for its royalty rates to rise and didn’t think an increase would threaten its business, according to people familiar with the company’s thinking. “This is a balanced rate that we can work with and grow from. Pandora also swallowed up on-demand music service Rdio last month, after buying a music analytics service, Next Big Sound and a concert ticket platform, Ticketfly. These events point clearly to the company’s determination to reclaim its top spot in music streaming, which is the fastest-growing part of the music business right now.

Pandora also sought lower rates to help level the playing field with terrestrial radio broadcasters, who pay royalties to music publishers and songwriters but not to record companies or performers. Pandora is likely to start licensing music directly from record labels anyway since it wants to expand overseas, and launch an on-demand, subscription service akin to Spotify, neither of which is covered by the federal government’s compulsory-licensing regime.

SNE 3.02 % ’s Sony/ATV Music Publishing in November and another this week with Warner/Chappell Music, a division of Access Industries’ Warner Music Group.

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