Establishing Fair Market Value Royalty Rates

Establishing Fair Market Value Royalty Rates

SoundExchange urges Congress to establish rate standard parity so all digital services are subject to a “willing buyer, willing seller” or fair market value royalty rate standards.

Since 1998, when the industry was in its early stages, satellite radio services have enjoyed a government-enforced below-market value royalty rate standard. As a result, satellite radio services like SiriusXM have been paying below-market rates for years while the recording artists and rights owners SoundExchange represents have been subsidizing these companies’ growth.

Today, the satellite radio industry consists of a sole market participant, SiriusXM, who has over 30 million subscribers and annual revenue of $5 billion (2016). Likewise, Music Choice and Muzak pay significantly lower rates than their non-grandfathered competitors offering the same service.

After twenty years, these provisions have outlived their original policy purpose, but Section 801(b) of the Copyright Act still allows the Copyright Royalty Board to adjust rates paid to copyright owners and creators to ensure “fair income” to the copyright user.

When the Music Modernization Act (H.R.5447) was introduced in the House, it included language from the Fair Play Fair Pay Act of 2017 (H.R.1836) that would establish a “willing buyer, willing seller” fair market value rate standard for all digital platforms.