Ruling on Regulatory Interpretation for Business Establishment Services
Published Date: 1/10/2025
Rule
Summary
The Copyright Royalty Board just clarified how to calculate "Gross Proceeds" for royalty payments that businesses owe when streaming music. This affects businesses using digital sound transmissions and SoundExchange, the group that collects royalties for artists. The new ruling, effective January 10, 2025, ensures everyone pays the right amount, so no surprise bills or missed payments!
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
How Businesses Must Count Gross Proceeds
If you run a business that provides background or streamed music to establishments, the Judges ruled that “Gross Proceeds” means all fees and payments from any source that are derived from use of copyrighted sound recordings during the license period. In-kind payments are included only if they were offered for the sole purpose of facilitating a Business Establishment Service (BES) transmission. Under the BES rules, the statutory royalty rates at issue are 10% (BES I) and 12.5% (BES II) of those Gross Proceeds.
Collectors and Rights Holders Favor Broader Base
The ruling adopts the interpretation advanced by SoundExchange that all fees and payments (including certain in-kind payments offered for the sole purpose of facilitating a BES transmission) count as Gross Proceeds. This interpretation supports SoundExchange’s ability to collect royalties under 17 U.S.C. 112 on that broader base starting January 10, 2025.
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