Webcaster Wake Up Call!

Photo by Mpho Mojapelo courtesy of the Creative Commons License.

Three weeks into 2018, we'll confess to still writing "2017" on the occasional check. Admit it: you probably have too (we can't be the ONLY ones still writing checks every now and again).

Webcasters complying with the statutory licenses found in Sections 112 and 114 of the Copyright Act - which permit them to webcast sound recordings if they comply with the license requirements - are unlikely to make that mistake in the coming year because:

1) a rate change for 2018 offers a pretty stark reminder that we're not in 2017 anymore; and

2) they are less likely to submit payments via check in 2018.

Before we get to the two major changes in play this year, a brief reminder of the basic obligations required of webcasters throughout the year:

• File an Annual Minimum Fee Statement of Account form and pay the associated $500 per channel minimum fee. This must occur no later than January 31. Noncommercial educational webcasters who stream 80,000 or fewer monthly aggregate tuning hours may also pay a $100 per webcaster "proxy fee" with the Annual Minimum Fee if they want to be exempt from filing Reports of Use.
• Pay any additional usage fees and file Monthly Statements of Account associated with those payments. This does not apply to everyone (in fact, noncommercial educational webcasters do not have to do this at all because, by definition, they will not exceed the $500 annual minimum fee). For months where additional royalties and accompanying Monthly Statements of Account are required, they are due no later than 45 days after the end of the relevant month.
• File Reports of Use. Again, not every webcaster must file Reports of Use (we're looking at you, noncommercial educational webcasters who pay the $100 proxy fee). But even some of the commercial webcasters, noncommercial webcasters, and noncommercial educational webcasters who choose not to pay the proxy fee do not have to engage in "census" filing on a monthly basis if they do not owe additional royalties beyond the minimum fee. Instead, they may file "sample" reports on a quarterly basis for two weeks of that quarter. Reports of Use are due no later than 45 days after the end of the relevant month or quarter.

Those basic requirements haven't changed from last year. So what are the two changes we hinted at above?

First, an increase in the Consumer Price Index means the "per performance" royalty rate applicable to all listenership for commercial webcasters and to the excess listenership beyond 159,140 monthly aggregate tuning hours for noncommercial webcasters has increased from $0.0017 to $0.0018. This means a webcaster must pay $0.0018 per listener per song. Or, to put it another way, a webcaster would pay 18 cents for every 100 people that hear a given song (or 18 cents for every 100 songs heard by one listener).

Second, SoundExchange continues to push webcasters toward exclusive use of the "Licensee Direct" online portal for submitting paperwork and making payments. While there are Annual Minimum Fee forms available for download and paper filings on the SoundExchange website, SoundExchange's memoranda for commercial, noncommercial, and noncommercial educational webcasters contain the following language in bold (and sometimes italics and underline):

We encourage services to log into SoundExchange Licensee Direct today to confirm/calculate, certify and pay for their 2018 minimum fees. It will be a requirement for services to use Licensee Direct for all monthly Statement of Account submissions. In general, there will not be an Excel version of the monthly Statement of Account available to licensees for transmissions beginning January 1, 2018.

SoundExchange has thus made it more difficult for webcasters to submit Statements of Account in paper format. Of course, SoundExchange's own language implicitly acknowledges that the regulations implementing the statutory licenses don't allow for a complete prohibition on paper filing; hence, the "in general" qualification at the beginning of that last sentence above. Apparently, those Excel forms will be available upon request for those who do not want to use Licensee Direct.

That said, webcasters who do not currently have a Licensee Direct account, but are interested in using Licensee Direct going forward should request an account now. All webcasters should build in a few extra days before their first Monthly Statement of Account filing and/or first Report of Use to either familiarize themselves with the Licensee Direct system or request the Excel-based Statement of Account form.

As always, please don't hesitate to contact us if you have any questions.