Member Alert


Two victories in the Copyright Royalty Board Section 115 Rate Proceeding
I am pleased to report two recent victories that protect our victory in the Copyright Royalty Board's (CRB) mechanical rate decision.  

As you know, on October 2, 2008, the CRB ruled that the mechanical rate for physical products (such as CDs) and permanent downloads (such as iTunes) is 9.1 cents with an overtime rate.  The CRB judges established for the first time a rate of 24 cents for each ringtone subject to the Section 115 mechanical license.  The CRB also incorporated the industry settlement establishing rates and terms for interactive streams and limited downloads. Furthermore, music publishers were granted a 1.5 percent late fee, calculated monthly.  After the decision was released, the Recording Industry Association of America (RIAA) appealed the late fee provision and the ring tone rate to the D.C. Court of Appeals, requesting a rehearing from the CRB.  

On July 15, 2009, the CRB denied the RIAA's Motion for Rehearing.  

Additionally, the constitutional standing of the CRB itself has been under attack by a party to the separate webcasting rate proceeding.  On May 13, 2008, Royalty Logic, LLC, filed a supplemental brief with the D.C. Court of Appeals in Intercollegiate Broadcast System v. Copyright Royalty Board asking the court to vacate the CRB's decision in the webcasting rate proceeding based on their argument that the appointment of the Copyright Royalty Judges by the Librarian of Congress is unconstitutional as the appointment violates the Appointments Clause of the Constitution. The RIAA's appeal in the mechanical rate proceeding before the same court was held in abeyance until the constitutionality issue was decided.  

On July 10, 2009, the Court of Appeals declined to rule on the constitutionality question 'on the basis of hasty, inadequate and untimely briefing.'  While the court also expressed an ongoing concern regarding the appointment of the CRB Judges, the court's decision is a sigh of relief for the music industry, preventing what would have certainly been chaos in an already tenuous marketplace, and offering the affected parties a chance to resolve the issue through legislation.   While we are hopeful Congress will address any long term concerns regarding the Copyright Royalty Board, we are pleased the Board's recent rate decision will remain as law.  We will be sure to update you as the RIAA's appeal moves forward.