Major and Indie Labels Will Be Paid The Same Webcasting Rates… For Now

Independent labels and artists had something extra to be thankful for this Thanksgiving.

In a November 25, 2015 ruling, the U.S. Copyright Office made it clear that webcasting royalty rates for the period covering 2016-2020 would treat major and independent record labels the same, as has been the case since the the establishment of a public performance right for digital transmission of sound recordings. Last week’s decision, handed down by Register of Copyrights Maria Pallante, is a response to the Copyright Royalty Board’s (CRB) question about whether the federal statute that provides for rate-setting (17 U.S. Code § 114) would permit different rates for majors and indies.

The independent music community—ourselves included—oppose “tiered” rates, as do noninteractive services like Pandora. On the creator side, such a system would result in independents being treated as second-class citizens on digital radio. This would be a huge blow for indies. Webcasting in general performs 80 percent more music than FM radio; if we ended up being disadvantaged in royalty rates, it would seriously undermine the value of our participation. Keep in mind that Adele and Taylor Swift are on independent labels—clearly, their music is very much in demand. It’s ridiculous to think their labels—Big Machine Records and XL, respectively—would earn less per play than Universal or Sony. Digital music services increasingly recognize the value that independent music brings; why should the government ignore something that is so clearly understood by the music community?

By December 15, 2015, the Copyright Royalty Board will issue their determination on royalty rates for the period of 2016-2020. This will (probably) conclude the Webcasting IV proceedings, in which evidence was presented by various parties, incluidng SoundExchange (the nonprofit that collects and distributes digital performance royalties to artists and labels) as well as services like Pandora and iHeart Media. Music creators obviously want our royalties to increase, but we certainly do not favor a system that treats independent music—which commands more than 30 percent of the global market for music and continues to grow—like some kind of afterthought.

Interestingly, Register Pallante didn’t technically rule on the matter at hand—she simply maintained the status quo by refusing to rule on the CRB’s question due to a procedural slipup. § 802 of the Act allows the CRB to request an answer from the Register when a matter is raised during proceedings. But since active proceedings were over when this particular question was posed, Pallante ruled that the CRB had missed its window. Therefore, the status quo holds. Which is good news, but it probably means it isn’t the last time this will come up. Said Molly Neuman, Interim President of the American Association of Independent Music (A2IM, the trade organization representing independent labels):

This is a win for independents everywhere, including the artists and the independent publishers who stood with us on this issue. However, the battle for a fair and equitable licensing system continues, as long as the multiple rate question remains unsettled for future proceedings and companies like Sony and Universal work towards getting government to enshrine an unfair advantage for just the biggest companies.

Over the past 15 years, groups like A2IM and FMC have gone to bat to make sure that independents are treated fairly wherever our music is used. You can bet that in five years time, if this issue comes up again, we’ll be out front making the case for the value of independent music. But for now, we’ll just raise our glass of eggnog and cheer the awesome music from independent artists and labels this year and the many more to come.

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