On December 16, 2015, the Copyright Royalty Board (CRB) decided that beginning on January 1, 2016, online radio companies will have to pay 17 cents per 100 streams of songs, up from the old rate of 14 cents.  The rates will remain at 17 cents until 2020.  This decision follows tension over how profits from online music services are allocated between labels and artists.

Record companies and artists have been dissatisfied by what they considered to be low profit from various music streaming services, and some still believe 17 cents is not enough.  The Los Angeles Times reported that SoundExchange (which represents the labels) has stated, “we believe the rates set by the CRB do not reflect a market price for music and will erode the value of music in our economy….”

For the music streaming companies, this increase makes a dent in their bottom line.  After going public in 2011, Pandora has consistently struggled to achieve profitability.  Although the company has 80 million users, it increasingly has other companies competing for the same customer base.  In 2015, Pandora lost 44 percent of its revenue to royalty payments, amounting to more than $400 million.

Overall, the Board’s decision reached a compromise between both sides of the industry.  Pandora, and undoubtedly other similar companies, are currently seeking to broaden their services to more foreign countries where the rules may be more flexible.

Navigating entertainment and copyright law can be challenging.  Speaking with an attorney who is experienced in entertainment and copyright law is essential to protecting your rights.  For more information about copyright issues, contact the experienced attorneys at AGMB at 310-300-2900 for the Los Angeles office, or at 212-201-1170 for the New York office.