Item 8.01 Other Events.
On June 11, 2021, the Copyright Royalty Board (the "CRB") of the Library of
Congress issued its initial determination regarding the royalty rates payable by
us under the statutory license by which webcasters perform sound recordings via
digital transmission over the internet and make ephemeral (server) copies of
those recordings during the five-year period starting January 1, 2021 and ending
on December 31, 2025. Because the proceeding focuses on setting statutory rates
for non-interactive online music streaming (commonly identified as
"webcasting"), the proceeding sets the rates that our Pandora business pays for
statutorily licensed music streaming on its free, ad-supported service (and for
the non-interactive music streaming that occur on its subscription tiers), and
that our Sirius XM business pays for music streaming on its subscription
internet radio service.
This proceeding does not set the rates that we pay for our other music offerings
(such as our satellite radio or business establishment services) and does not
affect the rates we pay music publishers for our services, which are covered
under different licenses. The statutory rates set in this proceeding will,
however, affect the amount we pay for streaming on Pandora under certain of its
direct licenses with sound recording copyright owners (i.e., record companies).
The royalty rates under many of those direct licenses, which cover a large
majority of the sound recordings that we perform on Pandora, are indexed to the
statutory rates established in this proceeding.
Under the terms of the CRB's decision, the statutory royalty rate in 2021 will
be $0.0021 per performance for non-subscription transmissions (such as offered
by the Pandora ad-supported business) and $0.0026 per performance for
subscription transmissions (such as offered by the Sirius XM internet radio
service). The rate for 2020 was $0.0018 per performance for non-subscription
transmissions and $0.0024 per performance for subscription transmissions. The
rates announced by the CRB in this initial determination for 2021 are an
approximate 17% increase in the rates for non-subscription transmissions and an
approximate 8% increase in the rates for subscription transmissions, in each
case over the rates in effect during 2020. Rates for the remainder of the
five-year period are subject to adjustment each year by the CRB to reflect any
changes occurring in the cost of living as determined by the most recent
Consumer Price Index for All Urban Consumers.
The parties have fifteen days from the June 11, 2021 initial determination to
move for rehearing. Once the CRB has considered any rehearing motions and
responses to such motions, and provided the Register of Copyrights with sixty
days to review the determination for any legal error, the Librarian of Congress
will publish the final determination in the Federal Register. The parties will
have thirty days from that publication to appeal the decision to the U.S. Court
of Appeals for the District of Columbia Circuit.
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