These rates were inclusive of both the Section 114 license fees and the royalty payable under
Section 112 for ephemeral recordings used solely to facilitate transmissions for which it paid
royalties.^3188
The CRB’s decision caused great controversy and protest, particularly among small
webcasters, who claimed the rates were so high that they would put the webcasters out of
business. Several bills were introduced in Congress and negotiations with SoundExchange took
place to reduce the rates for small webcasters. On May 22, 2007 SoundExchange announced
that it would extend for another three years (through 2010) the previous, lower rates under the
SWSA for small webcasters (i.e., 10% of gross revenue up to $250,000 and 12% of revenue
exceeding that amount).^3189 On Aug. 21, 2007, SoundExchange set out certain conditions that
had to be met by a small webcaster to qualify for the favorable rates – the webcaster had to earn
less than $1.2 million in total annual revenue and could not exceed a total of 5 million aggregate
tuning hours each month. Should the threshold be exceeded, the webcaster would be required to
pay the CRB’s published rates. SoundExchange announced that the agreement would apply only
to performance royalties collected on behalf of the 20,000 recording artists and 3,500 record
labels represented by the collective – royalties due to other artists and labels would be payable
under the CRB’s rates. Interested webcasters had until Sept. 14, 2007 to accept the offer.^3190
On Aug. 23, 2007, SoundExchange also announced an accord on the amount of fees
some large webcasters would pay – specifically, that a $50,000 cap would replace the $500 per-
station minimum fee set by the CRB. In return for the cap, the signatory webcasters agreed
within six months to begin collecting and reporting census information on all songs streamed
over the Internet. SoundExchange and DiMA also agreed to form a committee designed to
analyze the issue of audio stream-ripping and technological solutions that might be available.
The agreement did not, however, disturb the CRB’s per-performance royalty fees.^3191
On Aug. 10, 2007, the Copyright Office, acting under the provisions of the CRDRA,
formally terminated all open proceedings under the old CARP system.^3192
On Oct. 16, 2008, President Bush signed into law the Webcaster Settlement Act of 2008
(“WSA 2008”), Pub. L. 110-435, 122 Stat. 4974, in order to provide more time for
(^3188) 72 Fed. Reg. 24084, 24111 (May 1, 2007). The CRB’s decision was initially set forth in a report published on
its web site on Mar. 2, 2007. Representatives of the Intercollegiate Broadcasting System Inc., DiMA, National
Public Radio, the Radio Broadcasters, Royalty Logic Inc., WHRB (FM), SoundExchange, and many small
commercial webcasters filed a series of motions seeking a rehearing on the royalty scheme. On April 16, 2007,
the CRB rejected the motions. On July 11, 2007, the U.S. Court of Appeals for the D.C. Circuit denied a
petition filed by webcasters seeking to stay the CRB’s determination. “SoundExchange Offers Webcasters
Reprieve After D.C. Court Denies Petition to Stay,” BNA’s Patent, Trademark & Copyright Journal (July 20,
2007) at 345.
(^3189) Id.
(^3190) “SoundExchange Agrees to Separate Royalty Deals Between Large and Small Webcasters,” BNA’s Patent,
Trademark & Copyright Journal (Aug. 31, 2007) at 530.
(^3191) Id. at 529.
(^3192) 72 Fed. Reg. 45071 (Aug. 10, 2007).