Opposing Intervenor Briefs Emerge in CRB D.C. Circuit Appeal

Sound Exchange’s arguments against the CRB’s royalty rates are “founded on the false premise” that the CRB accepted calculations from Sound Exchange’s own expert, said NAB, the National Religious Broadcasters Noncommercial Music License Committee, and Google in a joint intervenor brief. The broadcaster filings in the cases “retrace contentions that the CRB and this Court have previously rejected, and they should be rejected again,” said Sound Exchange.

Sound Exchange, NAB and the NRBNMLC are appellants in the three cases before the D.C. Circuit as well as intervenors. All three cases were filed in November 2021 after the CRB decision became official in October 2021. NAB’s appeal challenged the CRB’s rates as too high and argued that broadcasters simulcasting on the web and terrestrial radio should pay a lower rate, in docket 21-1245, NRBNMLC appealed with the argument that religious and noncommercial broadcasters should pay less than the CRB determined in docket 21-1243, and SoundExchange appealed with arguments that the rate should be higher in docket 21-1244. Despite the multiple sides, the three cases are being briefed together, with final briefs due Jan. 12.

The CRB decision set royalties for non-subscription services at .0021 cent per song per listener from 2021 until 2025, and increased the annual minimum fee paid by webcasters from $500 to $1,000. The arguments put forth by the appellants in the intervenor briefs are “pretty much as expected,” said Wilkinson Barker broadcast attorney David Oxenford.

The joint brief from the broadcasters and Google argued that SoundExchange has mischaracterized the CRB’s actions in calculating the royalty rates. SoundExchange has argued that the CRB went against its prior endorsement of testimony that the opportunity cost for SoundExchange of collecting fees is .0022 cent per song by setting the royalty rate beneath that. The CRB never endorsed that value, said Google, NAB and the NRBNMLC. “Instead, the Board found significant faults” in the opportunity-cost analysis, said the joint intervenor brief. SoundExchange also hasn’t identified any errors with the methodology the CRB proceeded with, said Google and the broadcasters.

SoundExchange argued that the CRB and the D.C. Circuit have repeatedly rejected many of the broadcaster arguments for lower rates. “The rate structure the CRB adopted for noncommercial webcasters has been in place since Web II, and NRBNMLC offers no persuasive reason to deviate from it now,” said SoundExchange. “Nothing in the First Amendment or Religious Freedom Restoration Act requires that religious organizations should be entitled to pay below-market rates for sound recordings.”

NAB “failed to meet its burden” with arguments that broadcasters simulcasting music online and over broadcast spectrum should get a lower rate. “That proposition was NAB’s to demonstrate in the first instance, and the CRB certainly did not act arbitrarily and capriciously” by denying it, SoundExchange said. SoundExchange’s own appeal does argue that the CRB acted arbitrarily and capriciously, but in not setting a higher rate.

SoundExchange also defended the CRB’s increase of the minimum fee. SoundExchange “has never tried to recoup all of its administrative costs from minimum fee payments,” but has pushed for an increase since 2018. “Inflationary pressures have pushed costs up and eroded purchasing power since 2006” when the minimum fee was last set, at $500. “Between January 2006 and December 2020, there was a 31.35% increase in the Consumer Price Index, which means the original $500 minimum fee needed to be at least $656.77 to keep pace with inflation,” said SoundExchange. “The CRB also rested its increase on evidence of increased administrative costs,” the intervenor brief said.