Copyright Office Posts NAB, Sound Exchange Streaming Rates in Federal Register

March 5, 2009

Washington - Mar 4, 2009 - On Feb. 15, 2009, the NAB and Sound Exchange reached agreement on rates and terms for the streaming of music over the Internet for 2006-2015. Any commercial broadcaster that meets the eligibility requirements may choose to operate under the Section 112 and 114 statutory licenses in accordance with the rates and terms set forth in the agreement rather than the rates and terms of any determination by the Copyright Royalty Board. The Copyright Office published the notice of the Webcasters Settlement Act of 2008 in the March 3, 2009, Federal Register.

The NAB has provided an overview and summary of the rates and terms of the deal. The NAB suggests that stations with questions about station eligibility to opt for the rates and terms of the NAB/Sound Exchange agreement should contact their station attorney.

The Copyright Royalty Board (CRB) sets the rates and terms for the statutory licenses to stream music over the Internet. These payments are for the right to perform sound recordings (i.e., the artists' rendition of a song, not the composition itself) and to make ephemeral copies of sound recordings that occur during the process of streaming. After opposition to the rates and terms that were set by the CRB for the 2006-2010 license period, Congress passed the Webcaster Settlement Act, which permitted Internet-only webcasters and broadcasters that stream their over-the-air transmissions to reach settlements outside of the scope of the CRB process if they did so before Feb. 15, 2009. Under the law, such settlement agreements will bind all recording artists, not just those that are members of Sound Exchange.

What are the differences between the rates and terms of the NAB/Sound Exchange agreement and the current CRB rates and terms?

  • The deal provides a roll back of rates for 2009-2010 and sets rates for the 2011-2015 license period, providing immediate relief and certainty for broadcasters through 2015.
  • Rates for both simulcasts and webcasts are on a "per performance" basis as follows:

    Year Rate

  • Broadcasters may submit monthly reports of use for a certain percentage of programming (such as syndicated programming, for which exact usage data may not be available) on an Aggregate Tuning Hour (ATH) basis.
  • Broadcasters that qualify as "small broadcasters" under the agreement may submit a $100 annual proxy fee in lieu of records of use reports.

    What conditions are the same as streaming under the current CRB rates and terms?

  • An annual $500 minimum payment due at the beginning of the year, recoupable against monthly royalty payments.
  • All other requirements of the Section 112 and 114 licenses and applicable regulations, such as filing notice of use with the Copyright Office before beginning to stream, filing monthly statements of account and royalty payments with Sound Exchange, compliance with statutory conditions on streaming, etc.

    During negotiations with Sound Exchange, the NAB sought relief from streaming certain requirements, such as the sound recording performance complement requirement, which controls how many songs by one artist or from one album can be played in a certain amount of time. These requirements are part of the statutory license, so Sound Exchange does not have the authority to negotiate those issues as part of rates and terms agreed to in a settlement deal.

    Therefore, NAB negotiated relief from some of those conditions separately with certain record labels. Broadcasters that opt to stream under the NAB/Sound Exchange rates and terms may benefit from these separately negotiated waivers.

    The NAB/Sound Exchange agreement is not automatically binding on NAB members, but instead provides an option for broadcasters who are currently streaming music or who anticipate doing so in the future. Broadcasters may continue to pay streaming royalties under the current CRB rates and terms through 2010, and the rates and terms to be set in the upcoming 2011-2015 license period. The NAB/Sound Exchange agreement is available as an alternative to these rates and terms.

    Eligible broadcasters who are currently streaming and wish to elect these rates and terms must submit to Sound Exchange a completed and signed election form at the Sound Exchange website by April 2, 2009. Click on Download Forms and choose For Digital Music Services.

    Eligible broadcasters that begin streaming after March 3, 2009, will have 30 days after starting to stream to elect the NAB/Sound Exchange settlement rates and terms.

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