Copyright Royalty Board Raises Pandora, Non-Interactive Music Streaming Rates By 20%

In a landmark decision, the U.S. Copyright Royalty Board today  raised the rates that commercial non-interactive webcasters like Pandora effective January 1st, 2016.  But the news could have been much worse for Pandora.

Non-interactive webcasters will now pay 17 cents per 100 plays for those listening to free and ad supported streams through 2020, according to a statement from the royalty board. That's up 20% from the current rate of 14 cents per 100 streams.

A Victory For Both Sides

The decision can be considered a victory for both sides. SoundExchange had requested a rate of 25 cents per 200' while Pandora had lobbied for a drop to 11 cents. In addition to Pandora, the rate applys to most internet radio stations including iHeartRadio, AccuRadio, Live365, Shoutcast and  the webcasts of terrestrial radio stations. 

Starting in 2017 the rates for both subscription and nonsubscription services can be adjusted to reflect the increases or decreases, if any, in the general price level, as measured by the Consumer Price Index. 

Relieved investors sent Pandora stock up 20% in after hours trading.

Here is the full decision:

The Copyright Royalty Judges today issued their written determination of royalty rates and terms to apply from January 1, 2016, through December 31, 2020, to digital performance of sound recordings over the Internet by nonexempt, noninteractive transmission services (webcasters) and to the making of ephemeral recordings to facilitate those performances. The written determination is currently being reviewed by the parties to the proceeding to determine which portions, if any, contain confidential information that must be redacted from the version that will be released to the public.

The rate for commercial subscription services in 2016 is $0.0022 per-performance. The rate for commercial nonsubscription services in 2016 is $0.0017 per-performance. The rates for the period 2017 through 2020 for both subscription and nonsubscription services shall be adjusted to reflect the increases or decreases, if any, in the general price level, as measured by the Consumer Price Index applicable to that rate year, as set forth in the regulations adopted by the Judges’ determination.

The rates for noncommercial webcasters are: $500 annually for each station or channel for all webcast transmissions totaling not more than 159,140 Aggregate Tuning Hours (ATH) in a month, for each year in the rate term. In addition, if, in any month, a noncommercial webcaster makes total transmissions in excess of 159,140 ATH on any individual channel or station, the noncommercial webcaster shall pay per-performance royalty fees for the transmissions it makes on that channel or station in excess of 159,140 ATH at the rate of $0.0017 per-performance. The rates for transmissions over 159,140 ATH per month for the period 2017 through 2020 shall be adjusted to reflect the increases or decreases, if any, in the general price level, as measured by the Consumer Price Index applicable to that rate year, as set forth in the regulations adopted by this determination.

The Judges also determined details relating to the rates for each category of webcasting service, such as minimum fee and administrative terms. The regulatory language codifying the terms of the Judges’ determination is available on the Copyright Royalty Board website at www.loc.gov/crb/web-iv/web-iv-terms.pdf.