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Copyright Royalty Board Sets Satellite Radio License Fees

By | December 5, 2007

      [12-05-07 – Satellite Today] The Copyright Royalty Board has ruled that satellite radio companies will pay a performance license rate of 6 percent of gross revenues for use of music 2007 and 2008, and the rate will rise to 8 percent by 2012, XM Satellite Radio announced Dec. 4.
          SoundExchange, the non-profit organization that collects and distributes royalties on behalf of artists and record labels, had been seeking 10 percent of the revenues of XM and Sirius Satellite Radio in the first year of a new six-year agreement, with the rate climbing to 23 percent by 2012.
          "Today’s ruling by the Copyright Royalty Board brings to an end a year-long proceeding with the record labels and provides our company certainty regarding music performance royalties to be paid through 2012," Gary Parsons, XM’s chairman, said in a statement. "Moreover, the music performance fees set by the [Board] are in the range projected by many financial analysts who cover this industry.”
          According to SoundExchange, the Royalty Board said the value of music to the satellite services should start at a benchmark of 13 percent of total subscriber revenue.  “However, due to a federal law requiring that any new royalty rate avoid creating an overly ‘disruptive’ impact on the satellite services, the [Board] reduced the royalty.”
          “This result once again highlights the inequity of a rate standard that forces creators of music to subsidize certain music services with below market rates,” John Simson, executive director of SoundExchange, said in a statement. “We are glad that the decision affirmed the importance of music to XM and Sirius, but disappointed that the rate standard led to a lack of full and fair compensation because of the business circumstances created by XM and Sirius.”  
          Parties have 15 days from Dec. 3 to move for a rehearing. Once the final determination in published in the Federal Register, parties will have 30 days to appeal the decision to the U.S. Court of Appeals.

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