Broadcasters are hoping their cost of streaming is about to go down.
The federal Copyright Royalty Board is about to release rates for “non-interactive” streamers for the years 2016–2020, its so-called Web IV ruling. It includes stations that simulcast online as well as streamers like Pandora, iHeartRadio and the online version of Sirius XM. The ruling should become public in the next 24 to 36 hours.
The National Association of Broadcasters issued a summary of its stance in advance of the expected ruling:
“For over a decade, streaming rates have risen at an unsustainable pace,” Executive Vice President, Communications Dennis Wharton wrote to industry journalists. “While such rates have padded the bottom lines of record labels, these rates have proven cost prohibitive for many radio broadcasters seeking to enter the streaming business. Thousands of local radio stations have simply refused to stream music, thus denying listeners additional choices on new distribution platforms.”
NAB hopes CRB will lower rates “to a level that will enable a viable streaming business model for local radio stations. If the rates are lowered, more broadcasters will invest in and expand streaming services to the benefit of artists, songwriters and consumers.”
It said both webcasters and simulcasters — “including NAB, iHeartMedia, Pandora, SiriusXM, college broadcasters, and religious broadcasters” — feel that previous rates were based on bad information.“For the first time, interested parties were permitted to present evidence of marketplace deals for non-interactive streaming services themselves (the rate at issue) instead of benchmark rates for inadequate substitutes such as on-demand music services. This new evidence, we believe, presents to the CRB a more reliable indicator of what constitutes a fair market rate for streamed programming.”
NAB argues that radio stations pay streaming rates nearly double those of “pureplay” streaming services. “For example, most NAB member radio stations that stream music pay 25 cents for every 100 songs streamed, compared to the rate paid by Pandora, which is 14 cents for every 100 songs streamed.”
Interactive streaming services like Spotify are not affected by this particular CRB ruling. But financial observers think Pandora in particular has a great deal at stake; and the company has already scheduled a call for the investor community for after the markets close tomorrow, to discuss the ramifications for its own business.
Entertainment attorney Jay Rosenthal of Mitchell Silberberg & Knupp, who often represents music publishers, issued a statement saying, “Most likely, the Copyright Royalty Board judges will not change the rates significantly one way or another — and perhaps they might not change them at all. Since the Copyright Office did not allow for two levels of rates, based on the size of the copyright owner, there is no way to reconcile the two opposing positions. The most sensible position for the CRB to take is that they will essentially push forward the rates as they are today.”