The journey to set the US webcasting rates for 2016 through to 2020 has taken its next step towards implementation with the Copyright Royalty Board sending its final determination (which it issued at the start of March) to the Copyright Office Register for review.
“Thus begins the countdown for their determination to become a U.S. Federal Regulation, which set a rate of $0.0017 per play for free-to-the-consumer-streaming services and $0.0023 to paid subscriber streaming services,” says Billboard. What happens now is that the Copyright Office Register has 60 days to review it for any legal errors. Billboard has alluded to industry sources who suggest it is pretty much a done deal and the Copyright Office Register will push it through; although, once it is published in the Federal Register, affected parties still have 30 days to appeal.
It has been a long time in its evolution and will directly affect major music players such as Pandora and iHeartRadio as it will define what statutory rates they pay per stream for the next five years via the compulsory license made available under the Copyright Act. The rates affect only particular services that are classed as non-interactive music services broadcasting via the internet. Pandora, of course, has done a number of direct deals with the likes of Merlin while iHeartRadio has a direct deal with some labels like Big Machine; as such, these rates, if approved, will only apply to copyright holders not covered by direct deals. It is also important to note the rates only apply to master recordings and not publishing.
The services, naturally, have argued they need to pay lower rates to remain economically viable while the copyright owners feel they should be remunerated at the highest rate possible. The timing of all this has been put into sharp relief by the news reported in the Music Ally Bulletin yesterday that iHeartRadio has moved to try and restructure part of a $20.6m debt. The company is under pressure from some of its creditors, who are angry about a recent decision to transfer a $200m dividend from one part of the company to another. Equally Pandora has been mounting up debts for the past 16 years and lost $170m last year (and is also rumoured to be planning a push internationally); but it also acquired Rdio at the end of last year, with some suggestions this was a tactical move to allow it to negotiate more of its licences direct.
As ever, the need for corporate profitability and the need for copyright owners to get what the deem a fair price for use of their music balances on a knife edge.