#United States #Washington #SoundExchange #NAB #royalty rates

SoundExchange and NAB Agree on Non-Subscription Royalty Rates

In a significant development for the broadcast community, SoundExchange and the National Association of Broadcasters (NAB) have reached a landmark agreement concerning non-subscription rates for commercial broadcasters. This agreement arrives as a crucial shift in the landscape of royalty payments ahead of the Copyright Royalty Board's upcoming Web VI hearings. The agreement sets the stage for a new five-year plan beginning in 2026 and continuing until 2030, addressing key aspects of royalty payment structures and ensuring sustainability for broadcasters.

Overview of the Agreement

According to the terms of the deal, the per-performance non-subscription rate will see an increase from the current rate of $0.0025 to $0.0028 in 2026. Following this initial hike, the rate is set to grow by $0.0001 annually, reaching $0.0032 by 2030. Such a gradual increase reflects a mutual recognition of the needs of the creative community and the realities faced by broadcasters navigating the complexities of digital sound recordings and royalties.

In addition to adjustments in yearly rates, several important components have been negotiated to enhance the overall process:

• - Minimum Annual Fees: The current minimum fee of $1,000 will rise to $1,100 in 2026, with annual increments of $50 culminating in $1,250 by 2029 and remaining static through 2030.
• - Late Fees on Underpayments: Previously, underpayment penalties during audits carried a 1.5% monthly fee; however, under the new agreement, these will now incur a reduced rate of 1% per month and will also have their caps modulated, limiting them to 75% of the total owed amount discovered in the audit.
• - Revised Reporting Timelines: Reporting and payment deadlines have been streamlined to 30 days post-month-end instead of the prior 45-day frame, assisting broadcasters in maintaining timely compliance with royalty reporting.
• - Access to Performance Data: Beginning January 1, 2027, contractual obligations will include provisions for accessing performance data held by third-party vendors, ensuring enhanced accuracy in reporting practices.

Industry Implications

Michael Huppe, President and CEO of SoundExchange, expressed optimism regarding this agreement, stating, “This settlement with broadcasters provides needed increases for the creative community we represent, and allows us to forego the costs, uncertainties, and distraction connected with any litigation.” This sentiment underscores the potential benefits of collaborative dialogue over protracted legal battles.

Curtis LeGeyt, President and CEO of NAB, echoed this sentiment, emphasizing the importance of reaching terms that would afford broadcasters the certainty needed to sustain their operations. He remarked that the agreement ensures local stations can continue providing valuable connections to their audiences.

As the music industry continues to evolve with digital trends and global consumption patterns, the steps taken in this agreement signify a crucial pivot towards fostering a balanced relationship between content creators and broadcasters.

Conclusion

Overall, the agreement established between SoundExchange and the NAB presents a proactive move in the quest for fair royalty rates, benefitting both the creative community and commercial broadcasters. As the industry gears up for the upcoming Copyright Royalty Board hearings, the mutual commitment to supportive terms will play a pivotal role in shaping the future of broadcasting and music distribution.

This agreement not only sets the stage for upcoming negotiations but also establishes a precedent for how industry stakeholders can work together to enhance standards and practices in royalty management moving forward.