agreement on music royalties. Web sites with revenue below $1.25 million agreed to pay 12-
14% of their revenue in royalties annually, along with an annual $25,000 fee (applied to the
royalties owed). The agreement covers the period of 2006 through 2015 for large web sites, or
2006 through 2014 for small web sites.^3197
The CRB’s 2007 determination of rates was challenged in Intercollegiate Broadcast
Systems Inc. v. Copyright Royalty Board.^3198 The court largely upheld the determination, ruling
that the CRB’s interpretation of Section 114 was not unreasonable for failing to assume a
perfectly competitive market; that commercial webcasters had failed to show that the rates were
“crushing and disproportionate” (and therefore arbitrary and capricious); and that the CRB was
justified in determining a per performance rate, rather than a percentage of revenue fee structure
for small webcasters. However, because webcasters’ services could arguably be seen as offering
thousands of channels, the court remanded the question of whether the CRB should cap
minimum annual fees for a single licensee, rather than basing such fees on a per-channel-per-
station basis. The court also remanded the issue posed by the $500 minimum fees for
noncommercial webcasters, because the court said it was not supported by sufficient evidence in
the record.^3199
Following Intercollegiate Broadcast Systems, the CRB established a comment period in
November 2009 for the parties to reach an agreement regarding the remanded minimum annual
fee issue, and on Dec. 2 SoundExchange and DiMA submitted a settlement. The settlement was
published for comment on Dec. 23,^3200 and soon after adopted as final, setting the minimum
annual fee for commercial webcasters at $500 for 2006-2010.^3201 The second issue on remand,
concerning the $500 fee for noncommercial broadcasters, was settled by the CRB in a Sept. 17
decision in favor of upholding the fee. The CRB ruled that the evidence presented on remand
supported at least a $500 minimum fee for noncommercial webcasters, and that the industry
demonstrated an acceptance of these minimum fees, as evidenced in the agreements that industry
representatives have entered into pursuant to the Webcaster Settlement Acts of 2008 and
2009.^3202
The CRB then convened a hearing to determine the rates and terms applicable to the non-
settling participants and published a final determination on Mar. 9, 2011.^3203 One of the
participants filed an appeal to the D.C. Circuit, challenging both the $500 minimum fee imposed
and the constitutionality of the judges under the Appointments Clause of the Constitution. On
July 6, 2012, the D.C. Circuit ruled that the CRB judges were acting as principal officers of the
(^3197) Nathan Pollard, “SoundExchange and ‘Pureplay’ Webcasters Reach Royalty Agreement,” BNA News (July 9,
2009).
(^3198) 571 F.3d 69 (D.C. Cir. 2009).
(^3199) Id. at 76-82.
(^3200) 74 Fed. Reg. 68214 (Dec. 23, 2009).
(^3201) 75 Fed. Reg. 6097 (Feb. 8, 2010).
(^3202) 75 Fed. Reg. 56873 (Sept. 17, 2010).
(^3203) 76 Fed. Reg. 13026 (Mar. 9, 2011).