November 2019 – Update from NRB MLC

Dear NRBNMLC Friends:

As mentioned in our October update, NRBNMLC filed a case in September in Web V, which is the proceeding that will set sound recording streaming rates for 2021-2025. We are proud that we have a compelling case, developed under the direction of NRBNMLC Counsel Karyn Ablin of Fletcher, Heald and Hildreth. But the truth is that your committee should not have had to file a case.

Background

Since 1998, record companies and other sound recording copyright owners have had the right to receive license fees from radio stations that stream, as well as “pureplay” nonsubscription webcasters like Pandora. If those entities cannot agree on fees, a government-appointed three-judge panel, the Copyright Royalty Judges (“CRJs”), determines those fees for five-year license terms. The current Web V proceeding began in early 2019 with a mandated negotiation period for opposing parties to attempt settlement. SoundExchange, the recording industry’s and performing artists’ collective and compliance arm under the statutory license, is also those industries’ designated negotiating entity for the license. Participants in this proceeding representing copyright licensees (like your committee) have an incentive to reach a settlement in order to avoid the tremendous financial burden of litigation.

Your committee attempted negotiations with SoundExchange for several months earlier this year. SoundExchange, however, did not agree to license rates with us, but it did negotiate new rates with the two other significant noncommercial groups — NPR and a group representing student-run college stations, College Broadcasters, Inc. (“CBI”).

This is not the first time your committee has been frustrated at the negotiating table. The same scenario occurred in 2014-2015, when SoundExchange reached deals with the same two noncommercial groups but again refused to reach an agreement with our group, forcing us to litigate the rates instead.

Three-Pronged Approach

NRBNMLC has been engaged in three overlapping courses of action options in pursuing reasonable streaming rates. First, we continue to pursue settlement with SoundExchange. After your committee filed its case, we presented another, more innovative, proposal to SoundExchange and are awaiting their response. If SoundExchange accepts our proposal, it would be able to avoid a trial on noncommercial rates, as we are the only remaining group representing noncommercial interests.

Second, your committee has been litigating Web V, which is currently in the “discovery” phase, where documents are exchanged and depositions are taken. After a second round of witness testimony is prepared and submitted, we will soon have to switch to trial preparation, including witness prep, trial exhibit logistics, and a myriad of other details.

Third, we have been working on Capitol Hill under the leadership of Harv Hendrickson, Bill Harrier, and NRBMLC Legislative Consultant Karl Gallant to seek legislative assistance in obtaining reasonable streaming rates. Representatives of Congress could prove to be invaluable in convincing SoundExchange to treat noncommercial religious broadcasters on equal footing with other noncommercial groups.

All of this is expensive. However, not to participate in this proceeding would leave a vacuum that SoundExchange could exploit. They would be free to propose rates for noncommercial webcasters uncontested, no matter how high the proposed rates are. SoundExchange already has asked for the $500 fee for 159,140 monthly listening hours to be doubled and for the usage rate that applies above that threshold to increase by over 55%. Presented only with SoundExchange’s proposal and case before them, the CRJs could simply adopt the proposal unopposed and apply those rates to the some 1,400 noncommercial radio stations that we represent. That could result in some noncom stations actually being priced off the Internet.

Your participation is essential if we are to avoid such an outcome. Several stations have stepped up, but to see this through, we need to raise another $250,000 at minimum. Assuming that there are 400 stations financially involved in supporting Web V, then 1,000 stations are not. 1,000 stations raising $250K breaks down to $250 per station!

Do not stand on the sidelines and wait for the CRJs to set rates with only SoundExchange’s uncontested case presented to them as evidence. That will certainly happen if your committee cannot fund this fight. Doing nothing means your digital future will get complicated and potentially even more expensive!

Please send the pledge form found here with your contribution and let us know you are in this fight! Donations can also now be made easily online through this link.

Gratefully,

Scott R. Hunter

Executive Director

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