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Digital Music Survives to Stream Another Day

By Kevin Fayle on July 08, 2009 | Last updated on March 21, 2019
Some momentous events occurred yesterday in the world of digital music that may help to keep your favorite internet and satellite stations pumping out the tunes. 

First, the DC Circuit decided a case between SoundExchange, the organization that collects and distributes royalties to copyright owners, and Sirius XM Radio, who intervened in the case, over the royalty rate that satellite radio must pay to play music for the years 2007-2012.

Owners of copyrights in sound recordings have an exclusive right to "perform the copyrighted word publicly by means of a digital audio transmission," 17 USC § (106)(6).  Thus, in order to broadcast satellite radio, the broadcasters must pay a royalty to the copyright owner.  If they can't agree on a royalty, then the Copyright Royalty Judges step in and set one for them.
That's what happened here.  The CRJ set a rate of 6-8% of revenue, which SoundExchange did not appreciate.  The organization appealed, and the DC Circuit upheld the rate after finding that the CRJ's decision was neither arbitrary nor capricious.

The court did send the case backto the CRJ for consideration of the royalty rate for copies made in order to facilitate the broadcast, but overall the decision seems like a victory for Sirius, and its subscribers who won't have to pay more for their satellite radio stations.

Yesterday also saw the end of a two year-long fight over the royalty rate for internet radio stations.  The dispute has been raging since 2007, when the Copyright Royalty Board announced a massive increase in the rates that internet radio stations must pay to secure the right to play copyrighted music.  Many small and non-profit music stations argued that the new rates would force them to shut their doors.

After a long back-and-forth, SoundExchange agreed to a compromise and established a two-tier system whereby bigger internet radio stations will pay SoundExchange a percentage of US revenue up to 25% or on a per-song-basis (whichever adds up to more.)

Smaller stations will fall under a different formula and end up paying a different percentage.

All in all, it was a good day for digital music providers and the music fans who rely on digital music to get their fix.

See Also:
Webcasters, Music Industry Agree on Royalties (Wired)

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