SoundExchange Royalty Fees
SoundExchange Overview 2010
The rules regarding royalty fees due to SoundExchange have changed several times over the last few years. The current rules are a composite of Copyright Royalty Board (CRB) rulings, the Webcaster Settlement Act of 2009, and agreements struck between SoundExchange and organizations representing webcasters. These rulings establish several classes of webcasters - those classes most relevant to our customers are listed below.
The essential facts and important changes going forward from 2007 are:
- All webcasters playing copyrighted music on the Internet are subject to royalty payments to SoundExchange.
- Webcasters must register with the Copyright Royalty Board (CRB), and with SoundExchange. There no longer is a distinction in rates between a radio broadcaster (formerly called simulcasters), a webcaster (Internet only), and subscription services. These are all included in the category of "commercial webcaster", to be distinguished from "non-commercial webcasters".
- Organizations classified by IRS as tax-exempt are "non-commercial webcasters"
- There is no longer a special definition of "non-music programming" (i.e. talk, sports, etc.). Now, all fees are per-performance, and specifically excluded from that definition are "incidental performances" (musical segments of no longer than 30 seconds). Therefore, if a talk show broadcasts no musical content other than "incidental performances", they have played no performances, and therefore pay nothing to SoundExchange.
- All the rates listed here are for non-interactive services (listeners do not get to choose the songs they will hear). Webcasters must make separate agreements with copyright holders for interactive services.
- Even if their usage does not exceed the minimum, Webcasters must file a monthly "Statement of Account" with SoundExchange, accompanied with the appropriate payment, within 45 days of the end of each month.
- The calculation of your royalty fee on the monthly Statement of Account must now be made based on the number of performances, rather than on Aggregate Tuning Hours. A performance is one song heard by one listener -- one song heard by 100 listeners constitutes 100 performances. To make that calculation you must determine the number of listeners who heard each song played, and total up that number. Information about the songs being played is not required, simply the total number of performances in the month. This Wizard calculation program provides this information and calculates your royalty obligation.
- Webcasters must provide "Reports of Use" - previously, reporting was required once a quarter for a two week period, but "full census reporting" was instituted starting in 2009 which requires a report every month having the artist and title and the number of listeners for each song played during the month, including syndication. These reports are due 45 days after the end of each month. There are two exceptions for very small webcasters that are listed below.
Rates for Various Types of Webcasters
Default - Standard Rates for Webcasters
Unless and until a webcaster has elected to stream under one of the available "Alternative Rate Structures" (see below), the standard (default) rates, as established by the CRB, will apply. There are separate provisions for commercial and non-commercial webcasters, but the rates are the same except for the minimums, as listed below.
- Rates are per performance - one song heard by one person is one performance:
- The rates for commercial webcasters per performance are $.0008 for 2006, $.0011 for 2007, $.0014 for 2008, $.0018 for 2009 and $.0019 for 2010. In bigger terms, for 2010 one thousand performances costs you one dollar ninety cents, one hundred thousand performances costs one hundred ninety dollars.
|Year||Rate Per Performance|
- The rates for non-commercial webcasters (tax exempt) comprise a usage fee for programming in excess of 159,140 aggregate tuning hours (ATH) in any given month. Usage fees on the excess are at the same per performance rate as for commercial webcasters. There are special provisions for public radio stations and educational institutions not listed here.
- A minimum fee of $500 applies to either commercial or non-commercial webcasters per station or channel or side channel. Non-commercial webcasters whose usage does not exceed 159,140 ATH per month are eligible for the minimum rate.
- Commercial webcasters whose usage does not exceed 27,777 ATH per month are eligible for the $500 minimum rate, and may provide quarterly usage reporting (two one-week samples during a quarter) rather than full census reports.
- Eligible services under the commercial rules include all webcasters which are not registered as nonprofit under IRS code 501, and all ad-driver or subscription services.
Alternative Rate Structures
To be eligible for any of the following categories, webcasters must register their intent to webcast with the Copyright Board, and must opt-in with SoundExchange by filing the appropriate form. You may want to call to make sure your "application" was accepted for the category you elected.
In general, these rates and conditions apply to SurferNETWORK’s "Internet only" webcasters - most of SurferNETWORK’s radio station customers will be better provided by the NAB Broadcaster rules listed below.
- Eligible services include certain commercial "Internet-only" webcasters. These rates and terms were initiated under an agreement negotiated by SoundExchange to accommodate the online-only streaming functions of SIRIUS-XM, but others may opt in to these rates.
- The rates are:
|Year||Rate Per Performance|
- $500 minimum rate applies.
- Full census repoting is required.
Radio Station Broadcasters (NAB rules)
In February, 2009 RIAA/SoundExchange signed an agreement with the National Association of Broadcasters setting the rates and terms for the streaming of music over the Internet for 2006-2015. Any commercial broadcaster may choose to operate under this agreement. The key provisions of this agreement are:
- The deal provides a roll back of rates for 2009-2010 and sets rates for the 2011-2015 license period, providing immediate relief and certainty for broadcasters through 2015.
- The rates are:
|Year||Rate Per Performance|
- Stations wishing to operate under the NAB rates must opt-in at the SoundExchange website.
- There is a $500 annual minimum per station or channel.
- Small broadcasters (having less than 27,777 ATH/year for ANY of its broadcast SIMULCAST channels, and/or having less than 27,777 for ALL its Internet-only channels) can pay the $500 minimum, and a $100 annual proxy fee in lieu of providing full census reporting. You may want to call to verify that SoundExchange has accepted your proxy fee in lieu of reporting.
- Commercial webcasters with annual revenue less than $1.25 million are eligible.
- Royalty fee is either a percentage of revenue or a percentage of expenses.
- There is a minimum of $2,000/year for services expected to earn less than $50,000 annual gross revenue.
- There is a minimum of $5,000/year for services expected to earn more than $50,000 annual gross revenue.
- Microcasters, with less than 18,027 ATH per year, less than $5,000 annual revenue, and less than $10,000 annual expenses, may pay an annual $500 minimum fee, and may pay a $100 annual fee in lieu of providing usage reports.
Pureplay/Small Pureplay Webcasters
- Those willing to include their entire gross revenue in a percentage of revenue calculation to determine royalties.
- Minimum fee is $25,000 per year.