5 Things Broadcasters Should Know About SoundExchange Music Royalties

The recent Copyright Royalty Board decision (see my summary here) setting the rates to be paid by Internet radio operators to SoundExchange for the rights to publicly perform sound recordings (a particular recording of a song as performed by an artist or band) still raises many questions. Today, Jacobs Media Strategies published on their blog an article I wrote on the topic – discussing 5 things that broadcasters should know about music royalties. While the content of the article is, to some who are accustomed to dealing with digital music rights, very basic, there are many to whom the additional guidance can be helpful. The subject of music rights is so confusing to those who do not routinely deal with the topic – even to those who work in radio or other industries that routinely perform music and to journalists and analysts that write about the topic. Thus, repeating the basics can still be important. For those who click through from the Jacobs blog to this one, and for others interested in more information on the topics on which I wrote, I thought that I’d post some links to past articles on this blog on the subjects covered in the Jacobs article. So here are the topic headings, and links to where you can find additional information.

The new royalties set by the CRB represent a big savings for broadcasters. I wrote how the royalties represent a big savings for most broadcasters who simulcast their signals on the Internet. I provide more details about the new rates and how they compare to the old ones here.

All stations that stream music must pay these royalties in addition to the royalties that are paid to ASCAP, BMI and SESAC. In the Jacobs article, I note how surprised I am to find broadcasters who still don’t realize that, when they stream their music on the Internet, they need to pay not only ASCAP, BMI and SESAC, but also SoundExchange. I first wrote about that topic here, when many broadcasters and webcasters seemed to be confusing SoundExchange and SESAC, perhaps not realizing that they are different companies, collecting royalties for different purposes.

There are limits on the music that you can play under the SoundExchange license. Here I wrote about the “performance complement” which limits a broadcaster to playing a limited number of tracks from the same artist or from the same album consecutively (no more than 2 songs from the same album consecutively), and in any 3 hour period (not more than 4 from the same artist). I wrote about the issues that have been raised by the expiration of the waivers of those rules that had been negotiated by the NAB here, and about the NAB waivers when they were originally negotiated here.

You need to report what you play and how many people heard each song. SoundExchange relies on the webcaster to report how much music it plays, and how much it owes each month. I’ve written about the reporting obligations here (note that the small broadcaster exception mentioned in that article has now expired), and the fact that SoundExchange can audit webcasters to make sure that they have accurately reported on their performances, here.

These royalties apply only to “noninteractive” streams – and not to podcasts or any on-demand music service. The SoundExchange royalties apply only to noninteractive streaming – essentially Internet radio where the listener cannot determine what song he or she will hear next. It does not cover podcasting or on-demand streams – where licenses need to be negotiated directly with the copyright holders. I wrote about the fact that these royalties don’t cover podcasting here and here, and about a case where the Court of Appeals looked at what was a noninteractive stream, here.

These are but some of the many questions that arise about music royalties. The Jacobs article was directed principally to broadcasters who simulcast their programming on the Internet, but most of the issues are equally applicable to webcasters who are not also broadcasters. Obviously, it is a complicated area, so make sure that you know your obligations whenever you use music in any service that you provide.