SoundExchange’s Motion Sledge-Hammered

Today, Chief Copyright Royalty Judge, James Scott Sledge, Denied SoundExchange’s motion for a rehearing ‘“to reconsider the definition of Gross Revenues set forth at pages 28-31 of the [Initial] Determination; and, in light of recent predictions that approval of the XM/Sirius merger is imminent, reconsider its unwillingness to assess the impact of a merger as part of its [Initial] Determination.”’ Seeing that both sides aren’t particularly happy with the rate determination, the Copyright Judges must have done a good job.

SoundExchange based its motion on the need “to correct a clear error or prevent manifest injustice” in regard to the definition of Gross Revenue, and on new evidence with regard to the merger. The judges rejected SoundExchange’s arguments for the same reason it rejected them in the initial determination: insufficient evidence.

SoundExchange claimed that the initial determination excluded numerous categories of revenue that would result in a significantly reduced effective royalty rate. Judge Sledge found that “SoundExchange does not provide a shred of evidence concerning the nature or magnitude of leakage suggested by its own proposed revenue exclusions and how those exclusions might compare to any exclusions found in the agreements that comprise the benchmark marketplace.”

SoundExchange was also concerned that a merged entity might structure itself differently to reduce the effective royalty rate. SoundExchange failed to provide any evidence showing how or in what magnitude the rate might be effected by “gaming the system”.

The judge hammered SoundExchange in his conclusion stating that, “In the absence of an adequate showing of new evidence, SoundExchange’s argument amounts to nothing more than a rehash of the argument that the Judges considered in the Initial Determination.”

One Response to “SoundExchange’s Motion Sledge-Hammered”

  1. When webcasters appealed the CRB Internet royalty rates last year, SoundExchange’s John Simson repeatedly said that the royalties had been established by a long and painstaking process that ensured the decision was fair. He compared the webcasters’ objecting to the royalties as the equivalent of asking that the score of a game be changed after it was over because the losing side didn’t like the result.

    It would stand to reason that SoundExchange would admit that the satellite rates, as the result of an identical process, are equally as justified as the Internet rates. I mean, they wouldn’t consider appealing this decision just because they didn’t like the result, right?

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