Section 115

Parties announce settlement on online "mechanical" royalties; doesn't apply to Internet radio

Thursday, April 12, 2012 - 11:40am

Representatives of the music industry (labels and publishers) announced yesterday the settlement of a Copyright Royalty Board proceeding for "Section 115," or "mechanical" royalties digital music services pay to reproduce a musical work (read more in The Wall Street Journal here).

It is important to note that these are not the "public performance" royalties webcasters pay SoundExchange for the use of copyright sound recordings. Also known as "Section 114" royalties, those rates will be set with a proceeding beginning in 2014 (to settle by late in 2015) for the period from 2016-2020," explains industry attorney David Oxenford in Broadcast Law Blog.

Yesterday's settlement involves digital music services's use of music outside of "non-interactive" webcasting: sales of digital downloads, ringtones, on-demand streaming, "cloud" services, and "conditional" downloads (e.g. listening to Spotify offline).

Moreover, "mechanical royalties" are "payments made to the composers of songs -- those who write the words and music of the songs -- usually represented by a publishing company," Oxenford (pictured) explains.

By the way, satellite radio provider SiriusXM, like Internet radio, also pays Section 114 royalties. They're currently in a rate-setting proceeding for the 2013-2017 term. Oxenford predicts a decision in that case by the end of this year, "which could give some preview of what webcasters can expect in their upcoming case." Read more from Oxenford in Broadcast Law Blog here.

David Oxenford is a Washington, D.C.-based partner at Davis Wright Tremaine, and an expert on broadcast and Internet radio law and royalty matters. He'll sit down for a one-on-one discussion with U.S. Copyright Office general counsel David Carson on Sunday at RAIN Summit West in Las Vegas. More information, and the registration link, is here.

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