Cost of Living Increases Announced for Music Royalties Paid by Webcasters to SoundExchange and by Noncommercial Broadcasters to SESAC and GMR

By admin Dec2,2023

In Federal Register notices published this week, the Copyright Royalty Board announced cost-of-living increases for two sets of music royalties.  Webcasters, including broadcasters streaming their signals on the web or through mobile apps, will be paying more to SoundExchange for the public performance of sound recordings.  In addition, noncommercial broadcasters affiliated with educational institutions, but not affiliated with NPR or CPB, will be paying more to SESAC and GMR for their over-the-air broadcasts.  These changes go into effect on January 1, 2024.  More information about each of these royalties is set out below. 

The webcasting royalties that are increasing are those that are paid to SoundExchange by those webcasters making “noninteractive digital transmissions” of sound recordings (see our article here on the difference between interactive and noninteractive transmissions).  This includes broadcasters who simulcast their over-the-air programming on the internet or through mobile apps (or through other digital means including smart speakers like Alexa, see our article here).  The notice just published in the Federal Register sets out the computations that the Board used to determine the amount of the cost-of-living increase.  Those computations led to a royalty rate for 2024 of $.0025 per performance for services that do not charge a subscription fee. A performance is one song played to one listener – so for one song paid to four listeners one time each, a webcaster pays a penny. For subscription services, the rate will be $.0031 per performance.  This represents an increase from the 2023 rates of $.0024 for nonsubscription performances and $.0030 per performance for subscription stream. 

The rates that are currently in effect were set in 2021.  As we wrote here, when the CRB decided on the rates for 2021-2025, the nonsubscription rate was $.0021 per performance.  But the CRB provided for cost-of-living increases which will now increase those royalties to the rates set out above.  The current royalty structure is in place through 2025.

These increases also apply to noncommercial webcasters who exceed the monthly allotment of 159,140 aggregate tuning hours (a “tuning hour” is one listener listening to one hour of music programming) that any channel provided by a noncommercial webcaster gets for the minimum annual $1,000 fee.  However, many noncommercial webcasters, including those affiliated with NPR or CPB and those smaller webcasters associated with an educational institution, are covered by other royalty settlements that don’t involve per performance fees, so they are not affected by this cost-of-living increase. 

Webcasters need to take these new higher royalties into account in computing what they owe to SoundExchange for all streaming done in 2023.  While royalties for January streaming reflecting these new royalties are not due until 45 days after the end of the month (though annual minimum fees for most webcasters are due by January 31), webcasters need to anticipate these royalties in their budgeting for the new year, and adjust their accounting systems to account for these royalties starting January 1.

The second royalty that will be increasing in January will be that paid to SESAC and GMR by noncommercial broadcasters affiliated with an academic institution and not affiliated with NPR or CPB.  Included in this group of broadcasters are many student-run college radio stations.  The rates to be paid for the public performance of the musical compositions are paid to the performing rights organizations representing the songwriters and their associated publishing companies.  For noncommercial broadcasters, the rates are set by the Copyright Royalty Board (see our article here on the process for setting those rates and how it differs from the process for commercial broadcasters). 

The royalties to be paid by noncommercial broadcasters for their over-the-air broadcasts were set earlier this year for the period 2023-2027 (see the Federal Register publication of the CRB’s approval of the settlements on those rates).  Different rates were set fees for various classes of noncommercial broadcasters.  Those affiliated with NPR or CPB have royalties at one rate.  Religious noncommercial stations and other stations not affiliated with educational institutions (or with NPR/CPB) pay at different rates.  Those fees are set out in the settlements. 

Noncommercial broadcasters affiliated with a college or other educational institution, and not covered by the NPR/CPB or religious broadcasters fees, pay royalties at a third rate.  Those stations pay fees to ASCAP and BMI based on the size of the educational institution with which they are affiliated – with set increases each year written into the rules.  But for SESAC and GMR, the smaller of the rights organizations, the fees were set at a flat rate of $188 per station in 2023 to each of these organizations, no matter the size of the educational institution, subject to an annual cost-of-living increase.  In this week’s Federal Register notice, the CRB looked at the increase in the cost of living in the past year, and increased those fees for 2024 to $194 to SESAC and the same amount to GMR. 

Webcasters and college broadcasters need to note these fee increases, and be prepared for these increases in the amount that they will be paying next year. 

By admin

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