D.C. Circuit Unanimously Upholds CRB's Webcast Music Rates

The court’s review of administratively determined rates is ”particularly deferential” because such findings are “highly technical,” said the three-judge panel's opinion. The appellants faced “a high burden,” said Wilkinson Barker broadcast attorney David Oxenford. Since the rates involved are already in place and being paid, the decision means no change for broadcasters and other entities playing music online, he said.

Judges Patricia Millett, Florence Pan and Robert Wilkins appeared skeptical of the appellate arguments at oral argument in February (see 2302170058) and Friday’s decision is in line with past court decisions on webcasting rates, Oxenford said. The courts have tended to uphold the CRB’s findings, he said. Although appeals to the full D.C. Circuit or the U.S. Supreme Court are possible, they're unlikely to succeed, Oxenford said.

NAB, the NRBMLC and SoundExchange each appealed a different aspect of the CRB’s 2021 ruling on webcasting, which is commonly called “Web V” because it was the fifth webcaster rate determination.

In that ruling, CRB set royalties for nonsubscription 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. NAB’s appeal argued that broadcasters simulcasting their radio programming online should pay lower rates than do custom streaming services like Spotify and Pandora. NRB argued the final rates discriminated against religious broadcasters by not giving them the same rates as fellow noncommercial broadcaster NPR, and SoundExchange argued the rates it collects should be higher because the CRB didn’t correctly calculate the opportunity cost of collecting the fees. “We sustain the Board’s Final Determination in all respects,” said the opinion.

The CRB “appropriately exercised its discretion,” in saying NAB didn’t sufficiently show why broadcaster simulcasts should be treated differently from other music streamers such as Pandora, the D.C. Circuit said. Significant evidence showed “simulcasters and other commercial webcasters compete in the same submarket and therefore should be subject to the same rate,” the opinion said. The court conceded it may be necessary to treat such services differently in the future.

The NPR rates cited by NRB were based on a specific settlement and therefore the CRB was correct not to use them as a benchmark, the court ruled. The CRB’s “broad discretion encompasses its selection or rejection of benchmarks,” the court said. NRB also didn’t show religious broadcasters were being discriminated against, and its proposal to set a rate that would only apply to NRB members rather than all noncommercial webcasters is outside the CRB’s authority, the opinion said. The NRB “fails to cite any precedent” for imposing a statutory license “available only to select members of a particular trade organization,” the court said. “We are aware of none.”

SoundExchange’s argument the CRB had incorrectly determined the opportunity cost of collecting licensing fees and then ignored that cost in calculating rates “fails before it even starts.” the court said. “The very premise of SoundExchange’s argument is wrong. The Board never found as fact the opportunity cost value on which SoundExchange hangs its argument.” Since the CRB never expressly endorsed the opportunity cost referenced by SoundExchange, “the factual premise on which SoundExchange’s argument rests is no fact at all,” the court ruled.