Court Voids Spotify, Amazon Songwriter Royalty Increase
The DC Circuit Court of Appeals has voided the most recent royalty rate structure established by the Copyright Royalty Board.
The opinion, written by DC Circuit Judge Patricia Millett, addressed the CRB’s 2019 rate determination which increased royalty rates from digital streaming services such as Spotify and Amazon by 44% over a 5-year period.
In the ruling, the appeals courts took the CRB to task over a number of issues, including for failing to provide music streaming services with adequate notice of the final rate structure.
“This is no mere formality. Interested parties’ ability to provide evidence and argument bearing on the essential components and contours of the Board’s ultimate decision not only protects the parties’ interests, it also helps ensure that the Board’s ultimate decision is well-reasoned and grounded in substantial evidence,” Millett wrote in her opinion.
The opinion also ruled that the CRB failure to sufficiently explain their reasoning in the final rate determination, including the use of prior rate determinations as a basis for establishing new rates.
“Because we cannot discern the basis on which the Board rejected the Phonorecords II rates as a benchmark in its analysis, that issue is remanded to the Board for a reasoned analysis,” Millett wrote.
The court also sided with music streamers over claims that the CRB “substantively” redefined the definition of “service revenue” for bundled offerings after publishing its Initial Determination.
“Because the Board failed to identify any legal authority for adopting the new Service Revenue definition, we have no occasion to address the Streaming Services’ separate argument that the definition was arbitrary, capricious, or unsupported by substantial evidence,” Millett wrote.