Streaming Music Rates Upheld on Appeal

By George Khoury, Esq. on September 20, 2018 | Last updated on March 21, 2019

For listeners of streaming radio services, like Pandora, the recent decision over the licensing rates for those service providers may not have much of an impact.

But, for some of the copyright holders, the decision in SoundExchange v. Copyright Royalty Board, is bad news. Basically, the appellate court rejected the challengers' argument that the Board failed to adequately represent their rights when negotiating the rates for the 2016 to 2020 time period.

License to Stream

Licenses for streaming music are a little bit different than what an ordinary person might expect. Basically, non-interactive streaming services (ones where the listener can pick a channel, but can't necessarily pick a song) can license songs for fractions of a cent per play. The official rates are as follows:

  • $0.0017 per song for ad-based services
  • $0.0022 per song for subscription based services

This excludes services that allow users to pick exact songs, like Spotify. Those services generally pay more per play.

Challenging Rates

SoundExchange challenged the Board's setting of rates based on the agreements that Pandora and iHeartRadio had negotiated in the past. Specifically, it claimed that because Pandora engages in "steering," the court erred in relying on their agreements. Steering is the practice by which Pandora or another service promises a copyright holder (or clearinghouse) more plays if they can be given a lower licensing rate.

Unfortunately for the challenger, the appellate court rejected each of their arguments and upheld the rates SoundExchange argued were too low.

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