Settlement Between NAB and SoundExchange on Webcasting Royalty Rates for 2026-2030 – Rates are Going Up for Broadcast Simulcasts

As we have noted, a proceeding before the Copyright Royalty Board to set the rates to be paid to SoundExchange for the public performance of music by a non-interactive commercial webcasting service for 2026-2030 started last year, and is scheduled to be completed by the end of 2025.  SoundExchange and one of the major webcasting parties remaining in the case, the NAB, this week filed with the Copyright Royalty Board a proposed settlement of the current litigation over the royalty rates to be paid to performers and copyright holders (usually the record companies).  These are the royalties that commercial broadcasters pay to SoundExchange for streaming music online, including through mobile apps and to smart speakers.  The current rate is $.0025 per Performance (a performance is every time a song is heard by one listener – so, for example, if a station has 10 listeners during an hour and they each hear 10 songs, that is 100 Performances).  And, under the settlement, the rates will be going up, effective January 1, 2026.

The rates proposed in the settlement are as follows:

2026: $0.0028 per Performance;

2027: $0.0029 per Performance;

2028: $0.0030 per Performance;

2029: $0.0031 per Performance; and

2030: $0.0032 per Performance

The CRB case is currently set to go to trial on April 28, a week’s extension having just been granted, perhaps because of this week’s resignation of the Chief Judge of the CRB and the appointment of an interim judge (that announcement is on the CRB’s homepage).  The NAB had been advocating for substantially lower rates for broadcast simulcasts given their total lack of interactivity.  The argument is that simulcast streams, which simply rebroadcast the programming of a commercial broadcast station and are not influenced by “likes” or a user’s favorite songs or artists, should be charged less than those offered by services that allow some degree of user customization, tailoring the stream provided to the user based on their preferences, while still remaining a noninteractive service (see our articles here and here on the difference between noninteractive streams that pay SoundExchange at the rates set by the CRB and those offered by interactive services that must negotiate agreements with the record companies to play their songs).  See our article here on the Court decision upholding the 2021-2025 royalties which rejected a similar argument by the NAB. By settling, it appears that the NAB opted for certainty in establishing rates modestly higher in each of the next five years rather than incurring the substantial cost of litigating over what the rates should be and the uncertainty that comes with any litigation – as SoundExchange was asking for rates substantially higher than those set out in the settlement. 

This settlement does not end the proceeding.  There still are other parties, including several noncommercial broadcast groups, who have not yet reached any settlement and thus likely will proceed to the hearing later this month.  Pandora/Sirius XM are also still litigating over the rates that they will be charged.  The CRB is charged with determining the rates that would be agreed to by a willing buyer and willing seller in a competitive marketplace.  “Benchmark” rates from negotiated deals are often used as evidence as to what those rates should be – so the rates proposed in this settlement may well be noted as possible benchmarks to be used by the CRB in setting rates – though the parties may end up arguing over whether any benchmark they provide needs to be adjusted based on factors including the desire of the parties to avoid litigation costs and to secure certainty. 

The settlement also contains some minor changes in the terms by which the royalties are paid.  Minimum fees each year go up from the current $1,000 per station to $1,100 per station in 2026, rising $50 per year to a maximum of $1,250 in 2029 and 2030.  Payments are also due 30 days after the end of each month, not the 45 days currently provided by the rules.  The settlement also exempts from royalty payments “incidental performances” of music less than 30 seconds used as transitions between programming or where songs appear briefly in news or sports programs.  A careful reading of the proposed rules is needed to ensure that all nuances of the rules that will take effect in 2026 are understood.

The CRB will publish the settlement in the Federal Register for comment (though substantive comments are limited by the statute governing CRB proceedings to participants in the proceeding), before the Board considers the approval of the settlement.  It is usual for such settlements to be approved by the CRB unless the proposed settlement in some way conflicts with governing statutes.  Watch for further proceedings in this case but, for now, commercial broadcasters who stream their signals on the internet should expect to pay higher royalty rates starting on January 1.