Business
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What does it mean to “break” an artist? It’s a question that has plagued the music industry in recent months. If a singer has billions of streams but walks down the street unrecognized, have they broken? Is a lone billion-stream single enough, or is a second hit required as proof of staying power? And what if an artist racks up multiple hits but can’t pull off a major headlining tour?
The consensus among label executives is that the last pop artist to break big was Olivia Rodrigo, who had four top 10 Billboard Hot 100 hits during 2021 and debuted at No. 1 on the chart with “Vampire” in July 2023. It’s a track record, they say, that today makes her seem like a unicorn.
“Nobody knows how to break music right now,” one senior executive laments. “I think they’re all lost.”
“There is a need and a desire for new artists that have real substance — artists that are more than just a song, that we can really lean into, buy concert tickets, buy [merchandise],” says J. Erving, a manager and founder of the artist services and distribution company Human Re Sources.
“Each person I talk to in the industry is more depressed [about this] than the person I talked to before them,” says another manager.
This melancholy flies in the face of some bright spots. As of July 1, 14 artists had cracked the Hot 100’s top 10 for the first time, a varied group that includes the Nigerian singer Rema, the American rapper Coi Leray, the country powerhouse Bailey Zimmerman, and the regional Mexican star Peso Pluma. That number is already more than double the six newcomers (plus the Encanto cast) who entered the top 10 over the same six-month period last year — seemingly a sign that the industry can still catapult young talent into the popular consciousness.
Genrewise, country is buzzing, and Pluma is at the forefront of a regional Mexican boom. “There are artists breaking. It’s just that they’re in different genres, not typical pop,” one major-label A&R executive says. Pop’s current genre share dropped from 12.87% at the start of the year to 10.69% at the mid-point, according to Luminate.
Still, many music executives remain worried about stagnation beyond a single musical style. They scan the landscape and see “moments,” as one put it, that can fade, rather than genuine breakthroughs that endure. “A lot of people have this bleak mindset,” a second major-label A&R executive says. Even pop radio is seeing “historic lows” in consensus hits, according to radio veteran Guy Zapoleon, which has led to “a bear market for new music.”
Dylan Bourne, who manages rapper JELEEL!, among others, expresses a common industry sentiment: “I see one act that has broken through this year, and that’s Ice Spice.” He adds, “The fears and concerns that people were having last year have only increased.”
Some blame the meager number of big breakthroughs on label decisions. According to the first A&R executive, “Labels signed more and signed worse than ever before in the decade-plus I’ve been at a major.”
Some cite the precipitous decline of mass media like radio and the maddening unpredictability of TikTok. And some attribute the feeling of industry inertia to the exhausting intensity of competing for attention in a world where gamers and influencers wield as much clout as music artists, if not more.
“Every issue that we’re facing right now comes down to oversaturation,” Bourne says. “People are just buried in content.”
“You know when you go camping and someone pulls out a guitar, and you’re like, ‘Oh, my God. Can you please stop?’ ” grouses a third A&R. “That guy is on [digital service providers] now.”
In addition to those factors, executives say, a hit doesn’t mean what it used to. It’s common to hear grumbles about young acts who have hundreds of millions of plays of a single but can’t fill a small room for a live performance. “It’s easier [today] for folks to be passive fans,” Erving says. “For you to consider yourself really broken, people need to care about you beyond the song. Where is the connectivity? Are people really dialed in in a deeper way?”
As a result of these shifts, some executives argue that the industry needs to change the way it thinks about breaking artists. As one A&R executive puts it: “Maybe there aren’t as many players slugging home runs, but there are more producing a steady stream of singles and doubles.”
Talya Elitzer, co-founder of label and management company Godmode, works with rapper JPEGMafia, who she says “hasn’t had a traditional hit in a commercial sense.” Even so, “his business is enormous,” she adds. “We sold 15,000 vinyl records from his web store in 24 hours. He sells seven figures in merch.”
Another act climbing into this camp is Laufey, a Berklee-trained jazz singer and multi-instrumentalist who has amassed fans with swooning bossa nova and a lively TikTok presence. 18-ish months after Laufey released her debut EP, she was the number-one selling artist in terms of merch in small-cap rooms in 2022, according to Atvenu, the payment processing system which handles transactions at 125,000 shows a year. She sold out a fall tour where the average room fit 1,500 fans. “Some fans show up dressed like her,” says her manager, Max Gredinger.
Bourne believes that “if you’re an artist earning well into seven figures a year repeatedly on an annual basis, you’ve broken to a certain degree.” But he acknowledges “that is a different recognition of what breaking means” relative to the one that much of the industry still relies on.
That’s partially because ticket and merch numbers don’t matter as much to most labels. Unless an artist signs a 360 deal — which are increasingly out of favor with managers and lawyers — record companies are not getting a cut of those revenue streams. Labels tend to earn the bulk of their money from streams, downloads and old-fashioned sales.
The industry is “slowly moving” toward a different concept of breaking, one entertainment attorney says. “People are celebrating the mid-level breaks as if it’s the biggest thing in the world, because that’s what you get these days.”
Steve Cooper, former CEO of Warner Music Group, said last year that the company had taken steps to lessen its “dependency on superstars.” One way the major labels have done that is step up signings, with the goal of spreading growth across a larger number of artists rather than relying on a few tent-pole acts. In 2022, Hartwig Masuch, CEO of BMG, noted that his company’s business model “is designed to be robust enough not to need hits in order to survive.”
In addition, both major labels and streaming services are increasingly focused on identifying “superfans” and finding new ways to extract money from them. If these efforts are effective, the industry will be unable to avoid the reality that artists with small but passionate followings may generate more business than those with wide, shallow fan bases.
A study released by Spotify in July concluded that artists’ most dedicated followers — presumably the ones that might come to a show dressed like the performer — make up just 2% of their monthly listeners but generate 18% of their streams. Even more important: Those devotees account for 52% of merch sales.
For now, the uneasiness felt around the music industry is likely to persist. “The doomsday thing is comforting for people that don’t know what’s going to happen next,” says Kayode Badmus-Wellington, an A&R consultant for Def Jam. But he prefers to “revel in” the uncertainty. “I don’t know what’s going to happen next,” he adds. “But I want to be a part of it.”
Ask a lawyer: “Do you have too many clients?” The answer will only ever be, “I’d like more.” But not all lawyer-client relationships are created equal. Entertainment lawyers are not like lawyers who handle class action lawsuits and represent thousands of clients with little contact, or personal injury lawyers where you hope that you never have to help the particular client again. We are in a high touch, fast-paced, relationship-based, paper-intensive business.
Billboard raised some great questions and points last month in its widely-discussed report, “Music Lawyers Have a Problem: Too Many Clients, Too Many Deals & Too Much Paperwork.” It’s true: the digital era has removed substantial barriers of entry to recording and distribution of music. Now combine that with the ease and speed of music to market, songs written and recorded, sometimes by as many as ten or more credited writers and producers, and deals that are as varied and creative as the music they’re meant to protect. You’re left with ever-growing piles of music business paperwork.
This “Lawyer Problem” can and will be fixed by a combination of music industry education and training and the deployment of deal-making platforms and tools, aided by AI, that modernize and improve the whole dealmaking process. These are the fundamental beliefs that led me — and co-founder Steven Ship — to build Creative Intell, an education and deal-drafting platform now in private beta.
This doesn’t mean that every artist and their team members need to go to law school. But let’s face it: if you bring your car to a mechanic and can’t describe the problem, you aren’t setting yourself – or the mechanic – up for success. Attorneys spend an enormous amount of time on education, walking clients through basic deal points and nuances. In an age when deals are getting more and more bespoke, it behooves artists and their camps to master the broad dynamics and key terms of basic dealmaking. A striking number of industry professionals in positions where they should know better still don’t understand basic royalty accountings or recoupment; each one of these cases costs the client billable hours and/or a law firm a lot of time.
Administrative process may not sound like the sexiest topic. But given the high volume of deals being done, an enormous amount of time is wasted on tasks as simple as downloading documents, saving the file to the correct folder and naming the document, redlining, checking precedent from prior deals, and looking for variations to include in a revised draft. If you’re a lawyer or a manager, how many emails do you send or receive asking “Where are we with this?” Talk to any working attorney in the music business, and they will acknowledge that these are substantial, contributing factors to the drag on deals.
And you’d be amazed what happens once a deal is signed. How much time is spent on taking contracting metadata and having it entered into royalty systems? Why are producer agreements sent to record labels as PDFs that need to be manually entered into royalty systems? The same goes for song split data for publishers and PROs. Minutes that add up to hours and days can be saved throughout the entire contracting process. Notably, none of the tools utilized by music industry attorneys are actually built for making contracts or their other needs. As platforms where all of the above can be executed, organized and archived in one place emerge and become industry standard, transformative speed and efficiency will result.
And of course, it wouldn’t be a “future of work” piece if we didn’t touch on the potential of AI. Generative tech offers enormous promise in the dealmaking and contracting spaces. Google “legal tech” and “AI” and you’ll see waves of funding and new, still-experimental utility–and yes, plenty of missteps in these early days. But given the right focus and experienced oversight, well-trained engines are capable of generating bespoke language for some of the most common deals in the music business where clients can ask questions, and be provided with immediate, accurate contextual education. These sorts of next-generation platforms should lower the barrier to entry for all music industry stakeholders including artists, songwriters, producers, managers, etc. in a whole different way: creating much greater access to credible, needed legal direction and knowledge to handle the world of music industry deals.
None of this will put lawyers out of business. Rather, as the various elements laid out in this piece begin to come to market, attorneys will be freed to fix higher level issues such as song splits disputes that hold up income for years which require relationships to fix and stamina to resolve. They’ll have more time to develop relationships with more “buyers” and “sellers” to provide added value. And they’ll finally get ahead of paperwork to plan for their clients’ futures. In this world, lawyers may still be unable to help themselves from always wanting more clients. But those clients will receive better, faster service.
David Fritz is partner, Boyarski Fritz LLP, and co-founder, along with Steven Ship, of Creative Intell, a deal-making platform currently in private beta.
Continued growth in music subscriptions and new Copyright Royalty Board mechanical royalty rates helped Reservoir Media improve revenue 31% to $31.8 million in the fiscal first quarter ended June 30, the company announced Wednesday. About two-thirds of the improvement came from organic revenue growth while the remainder stemmed from the acquisitions of music catalogs of The Spinners and Greg Kihn, among others.
Digital revenue improved 34% to $17.5 million due to “increasing demand trends for streaming music globally, something we saw evidence of in Spotify’s higher-than-expected subscriber numbers reported last week,” said CEO Golnar Khosrowshahi during the earnings call. Spotify’s premium subscribers rose 17% to 220 million in the second quarter, beating company expectations of 217 million subscribers. Monthly active users, which includes subscribers and listeners to the ad-supported service, climbed 27% to 551 million, easily topping the company’s 530-million target.
Those gains helped Reservoir’s adjusted earnings before interest, taxes, depreciation and amortization to climb 36% to $10.1 million and outpaced the 20% increase in administration costs in the quarter. CFO Jim Heindlmeyer expects operating leverage — the ability to increase earnings by increasing revenue — to improve in the coming quarters. “Looking ahead, we expect revenue to outpace operating costs as this has generally been the case during our time as a public traded company,” he said.
Reservoir sounded upbeat about Spotify’s decision last week to raise the monthly price of its individual plan in the U.S. and other markets. Spotify’s increase, like the similar increases by Apple Music in 2022 and Amazon Music earlier this year, “will impact our revenues on a pretty linear basis,” said Heindlmeyer. “In other words, a 10% price increase at a streaming service will flow through to us at around a 10% increase to our pool of money.”
Last quarter’s music publishing revenue of $20.8 million was up 26% from the prior-year period and accounted for 65% of total revenue, down from 67% in the prior-year period. New mechanical royalty rates from streaming services established by the CRB for 2023 to 2027 represented “a meaningful increase” and allowed Reservoir “to recognize higher revenue associated with mechanical royalties from digital sources,” said Khosrowshahi. Publishing’s digital revenue grew 41% to $11.9 million and performance revenue improved 28% to $4.5 million. Synch revenue declined 8%, from $3.3 million to $3 million.
Recorded music revenue grew 37% to $10.4 million and accounted for 33% of total revenue, up from 31% in the prior-year period. The segment’s physical revenue grew 176% to $3.6 million. Digital and neighboring rights revenues, which combined to account for about 12% of recorded music revenues, improved 23% and 25%, respectively.
The decline in synchronization revenues — down 8% in publishing and down 68% in recorded music from the prior-year period — were the results of a timing issue, not the strike by actor’s and writer’s unions that has stopped productions of many television shows and motion pictures. Khosrowshahi said the advertising placement and movie trailer businesses are both “strong” but could have varied impacts based on when the strike ends.
Reservoir maintained its earlier fiscal 2024 guidance for both revenue ($127 million to $132 million) and adjusted EBITDA ($49 million to $52 million). “We remain confident about the growth trajectory of the global music industry and how Reservoir is positioned to capitalize on it,” said Khosrowshahi.
Earnings highlights:
Total revenue increased 31% to $31.8 million. Adjusted EBITDA rose 36% to $10.1 million.
Publishing revenue increased 26% to $20.8 million. Publishing’s digital revenue rose 41% to $11.9 million. Performance revenue jumped 28% to $4.5 million.
Recorded music revenue grew 23% to $5.6 million. Physical revenue jumped 176% to $3.6 million. Digital revenue improved 23% to $5.6 million.
Guidance for fiscal 2024 (the year ending March 31, 2024) remained at $127 million to $132 million, representing 6% growth at the midpoint. Adjusted EBITDA guidance remained at $49 million to $52 million, representing 9% growth at the midpoint.
One of Jimmie Allen‘s sexual assault accusers has a message for the embattled country star: You can’t sue me for handing over your cell phone – which she calls “evidence of a crime” – to the police.
The new court filing came from a woman who claims that Allen assaulted her in a Las Vegas hotel room and secretly recorded it. In her June lawsuit, she said she took the phone as evidence and handed it over to police. But in a countersuit last month, Allen claimed she essentially stole his property by doing so.
On Tuesday, Allen’s accuser (known as Jane Doe 2) asked a federal judge to dismiss that accusation – calling his claims about theft “nothing more than harassment of a victim and abuse of the judicial process.”
“Now, in addition to being a victim of sexual abuse and illegal video voyeurism, Plaintiff is faced with Defendant’s attempt to harass and intimidate her,” Doe 2’s lawyers wrote. “Allowing a defendant to sue a crime victim for reporting a crime and turning over evidence of that crime to the police is directly contrary to public policy.”
A representative for Allen did not immediately return a request for comment.
Allen, a once-rising country music star, has faced a swift industry backlash after being hit with two separate sexual assault lawsuits. The first case, filed on May 11, claims he “manipulated and used his power” to repeatedly harass and assault an unnamed “Jane Doe” on his management team.
The second case, filed on June 9 by Doe 2, claims that while she “willingly joined Allen in the bedroom” of a Las Vegas hotel, he later ejaculated inside her against her explicit wishes – and filmed the entire sexual encounter without her knowledge. Doe 2 says she took the phone with her when she left and, after Allen refused to share the password so she could delete the recordings, that she passed it along to the Las Vegas Police Department.
Last month, Allen responded to both lawsuits by denying all the allegations against him. In the case of Doe 2, he admitted to having “unprotected sex” with her, but said he “did not ejaculate during the encounter.” He also admitted to recording the incident but, crucially, said he had secured her explicit permission to do so.
He also countersued with allegations of his own, accusing Doe 2 of “conversion” — a civil tort similar to theft that involves someone taking property that doesn’t belong to them: “By taking his camera phone without permission, Jane Doe 2 wrongfully exerted a distinct act of dominion over Allen’s personal property,” his lawyers wrote at the time.
In her response on Tuesday, Doe 2’s lawyer say that taking the phone was not a form of civil wrongdoing, but merely “her exercise of rights as a victim of crime.” She cited previous cases that excused such seizures, like one in which a babysitter was sued for taking photos of child abuse.
“Plaintiff turned evidence of alleged illegal conduct, i.e., the recording of Plaintiff in a state of undress and of sexual acts without her consent, over to the police to investigate,” Doe 2’s lawyers wrote. “The law does not condemn victims for doing so.”
Rising Mexican pop star Kenia Os has resigned her recording deal with Sony Music Mexico and with 5020 Records, the new Sony imprint based out of Miami. “I’m thrilled to continue growing along with my label, Sony Music Mexico, and with 5020 Records to develop my career at an international level. I’m very excited about […]
Jonny Shipes is closing the doors of his renowned label and management company Cinematic Music Group after sources tell Billboard that he sold the firm’s catalog to Interscope Geffen A&M in an eight-figure deal. While one door closes, another opens for Shipes, as his latest endeavor begins today (Aug. 2) with the announcement of his new full-service […]
Radio companies, suffering from sluggish radio advertising and underwhelming stock prices, might be starting to see the light. B Riley Securities analyst Daniel Day expects national advertising to pick up in the second half of 2023. That hint of optimism, along with Cumulus Media’s better-than-expected second-quarter earnings released Friday, sent radio stock prices soaring over the last few days.
Cumulus’s net revenue of $210.1 million was down 11% year over year and 25% below the same quarter in pre-pandemic 2019, the company announced Friday. Earnings before interest, taxes, depreciation and amortization (EBITDA) of $30.7 million was down 32.6% from the prior-year period, but was helped by wringing out $12 million of cost reductions. Revenue was in line with the company’s expectations while EBITDA exceeded expectations. Adjusted EBTIDA of $28.7 million was 32% above the estimate of Noble Capital Markets analysts.
That was good news for some investors. Shares of Cumulus climbed 14.5% to $5.54 on Friday and rose another 14.4% to $6.34 on Monday. Even after Cumulus gave back some of those gains on Tuesday (Aug. 1) and dropped 11.7% to $5.60, its share price was more than 2.5 times above the 52-week low of $2.57 from May 9. On Monday, B Riley upped its Cumulus price target from $10 to $11 — implying 96% upside from Tuesday’s closing price — and maintained its “buy” rating.
The trends could portend good news for other radio companies. On Monday, shares of iHeartMedia rose 12.4% to $4.73. Even after dropping 3.2% to $4.58 on Tuesday, iHeartMedia’s stock stood at more than double its 52-week low of $2.21 set on May 26. iHeartMedia will report second-quarter earnings on Aug. 8.
For Cumulus, the quarter was all about optimizing what it can control while mitigating the downside of what it cannot control, said president and CEO Mary Lerner during Friday’s earnings call. “This proven skill set is serving us well as we make the best of the current tough ad environment,” said Lerner.
Cumulus cut $5 million of fixed costs, repurchased $5.7 million of its common stock in the second quarter, bringing the total repurchases to $39 million, and retired about $32 million of bonds at an average discount of 26%. It also announced the sale of WDRQ-FM for $10 million that is expected to close this quarter. Digital revenue of $37.5 million was down just 0.7% from the prior-year period. Cumulus’ digital marketing services businesses were up 21% year over year while its podcast audience was up 19%.
What Cumulus cannot control is the willingness of brands to buy advertising. A weak national advertising environment since late 2022 “remained the main factor driving a decline in total revenue,” said Frank Lopez-Balboa, Cumulus executive vp, treasurer and chief financial officer. Local spot advertising revenue — which accounts for 80% of Cumulus’s total stock revenue — was down 7% while soft national advertising caused total broadcast radio revenue to fall 16.5%.
She’s already one of the most famous mononymous celebrities in the world, and now Academy Award, Emmy and Grammy winner Cher has partnered with Irving Azoff’s Iconic Artists Group to expose new generations to her prolific, six-decade-long music career.
IAG has acquired Cher’s full interest in her past sound recordings and compositions for a sum that the company declined to reveal.
The 77-year-old singer-actress, who is now recording her first holiday album, has landed a No. 1 single on one of Billboard’s charts in each decade from the 1960s through the 2010s, beginning with her work as half of the duo Sonny & Cher, whose pop hits led to the hit CBS prime-time variety show, The Sonny & Cher Comedy Hour, which ran from 1971 to 1974. But she got her start when she was 17, singing background vocals for late producer Phil Spector, whom she refers to as “Phillip.”
Like many acts on IAG’s growing roster, Cher has a relationship with Azoff that goes back to the ’70s, when they were introduced by Cher’s sister, Georganne LaPiere, who was a close friend of Azoff’s. “I’ve never worked with her professionally,” he says, “but obviously have been a fan.”
Cher says her decision to make a deal with IAG came down to the respect Azoff shows artists. “I trust Irving,” she says in an exclusive interview with Billboard. “If he has a great idea, I respect him. And if I have a great idea, I know he will listen attentively. My voice will be heard.”
IAG’s first project with Cher will celebrate the 25th anniversary of “Believe,” her electro-pop hit that arrived in October 1998 and was Billboard’s No. 1 song of 1999.
Although she has yet to talk strategy with IAG, Cher says she and Mark Taylor, who co-produced the song, discussed building a box set around “Believe” and her album of the same name — a conversation in which Taylor proposed an ambitious agenda for her. “I said I’d like to do a concert with my favorite songs, and he said, ‘Why don’t you do an album?’ I said, ‘OK.’ And he said, ‘Why don’t you do a concert for the Christmas album?’ And I went, ‘Wait, dude. C’mon,’ ” she recalls with a laugh.
Cher, who is managed by Roger Davies and Lindsey Scott, concluded her last major tour in 2005 and a Las Vegas residency in 2011. Asked if she plans to tour again, she replies: “I don’t know,” although she says there will not be live performances tied to the anniversary of “Believe”: “I’m not going to be ready that soon.”
She would also like to explore releasing a box set of her lesser-known songs, including some of her more recent recordings. “Some of my favorite, favorite songs weren’t hits,” she says. “I wasn’t a very good singer until, oh, my God, I was 40. I met my teacher [Adrienne Angel]. She made me a real singer.”
Her wish list for such a compilation would include tracks that fared well on the dance charts but weren’t necessarily mainstream pop hits, including 2001’s “Song for the Lonely”; 2010’s “You Haven’t Seen the Last of Me,” which won composer Diane Warren a Golden Globe; and 1991’s “Save Up All Your Tears.”
There are also plans to license her vast catalog of hits for film/TV synchs. “I think that’s great because they’re good songs,” Cher says. “Not all of them, but a lot of them are really good. I’m surprised sometimes that people know me or know my songs.”
IAG’s acquisition includes the international share in her late ex-husband Sonny Bono’s publishing catalog, which she received in their 1975 divorce — a collection that Azoff says is “vastly underappreciated” and includes such Sonny & Cher hits as “The Beat Goes On” and “I Got You Babe.” Cher says she would love for those songs to find new ears, but adds, “It never actually occurred to me that kids would want to hear those old songs.” (IAG does not have a stake in her Los Angeles-based CHERlato pop-up gelato truck, which serves flavors like Snap Out of It! and kefir and cardamom.)
IAG president Jimmy Edwards says the company plans to mine all decades of Cher’s career. “She’s the symbol of empowerment,” he says. “She’s successful in everything she does — music, film, TV, fashion, you name it. There’s so much story to tell. That’s our goal, always: to make sure we’re working with our partners to help curate that story.”
Rafael “Rafa” Madroñal has been promoted to vp of business development for Sony Music U.S. Latin. In his new, expanded role, Madroñal leads a team that negotiates multi-million-dollar partnerships that increase Sony Music U.S. Latin’s income and audience. Madroñal also supervises the label’s new business and sponsorship strategy and department, working with a stable of […]
The U.S. Court of Appeals for the District of Columbia Circuit ruled last week to uphold the Copyright Royalty Board’s Web V rate determination, published in the Federal Register on Oc. 27, 2021.
That determination, which impacts non-interactive, programmed plays on digital radio like Pandora and iHeartRadio, set inflation-adjusted rates at $.0026 per paid subscription stream, up from $0.0024 cents. For ad-supported streams, the CRB set a rate of $0.0021, up from $0.0018 per play. (On-demand streams from services like Spotify and Apple are not included in this determination.)
These payments from digital radio, webcasters and simulcasters are made to SoundExchange, which in turn distributes royalties to labels and recording artists. Some labels have direct deals that get them paid directly from the large radio networks — in which case they turn over the artist’s share to SoundExchange, for distribution to artists.
The Web V rate determination covers the five-year term of 2021 through 2025, but since it includes inflation-adjusted rates, on Dec. 1, 2021, the 2021 rates set in the determination were adjusted to higher rates of $0.0028 per paid subscription stream and $0.0022 per ad-supported stream.
Around the same time as the adjusted rates were set, various participants in the Web V proceedings appealed certain aspects of the initial rate determination. They included the National Association of Broadcasters (NAB), which sought lower rates than the determination; and SoundExchange, which sought higher rates for commercial non-subscription, ad-supported services than the determination; and the National Religious Broadcasters Music License Committee. The Appeals Court ruling rejected their arguments.
In addition to upholding the per-play rates, the Appeals Court also reaffirmed the doubling of the minimum rate to $1,000 per station, up from $500 per station annually, with a maximum aggregate minimum fee of $100,000 for large commercial radio broadcasters with more than 100 stations.
In a statement, SoundExchange said: “We appreciate the court’s thoughtful attention to our appeal regarding royalty rate-setting methodology, and we are pleased that the appeals court rejected broadcasters’ efforts to reduce royalty rates at the expense of hard-working artists and creators and preserved the status quo for webcasting rates through 2025.”
This ruling confirms that broadcasters compete with audio music services for listeners and, therefore, should continue to pay royalty rates on a level playing field. The appeals court determined that the broadcasters failed to adequately give reason why artists and rights owners should subsidize the broadcasting industry even more than they already do. After all, broadcasters still inexplicably get a free pass for the use of sound recordings on their AM/FM transmissions.
Meanwhile, NAB said in a statement to Radio Ink and confirmed to Billboard that it was pleased that “the Court rejected SoundExchange’s aggressive and deeply flawed arguments in favor of higher digital royalty fees and acknowledged that broadcasters could pay a lower rate for simulcasts in the future.”
(The reference to possible lower rates for simulcasts in the future comes from the Appeals Court ruling “that future records may warrant new rate category distinctions” between simulcasting and other types of commercial webcasting.)
The NAB statement continued, “We will continue advocating for reasonable streaming rates that allow broadcasters to expand their digital offerings and stream music, which will benefit performing artists, songwriters and our tens of millions of listeners.”