Wednesday, December 19, 2007

Copyright Judges Publish Determination of Rates and Terms Document

In their determination of rates and terms for royalty rates to be paid by satellite radio, the Copyright Judges go into detail of how their predecessor (CARP) determined the rates versus how they approached it. The document goes into the gory detailed of the various proposals and why they were not appropriate before determining that the best approach for approximately usage was revenue based, rather than a "per play" as proposed by Satellite Radio or the "per broadcast/per subscriber" as proposed by SoundExchange.

It is a very enlightening and fascinating read into the process used by the judges as well as the history behind the determination of rates. It is well worth the read. There are many nuggets of information to be garnered such as the following:

For example, EBITDA profitability for Sirius is estimated by Mr. Karmazin to be consistent with revenues generated from between 10 million and 11 million subscribers. 6/7/07 Tr. 35 (Karmazin). Increasing the current royalty rates to 13% will increase costs and raise the necessary critical mass of subscribers sufficient to generate revenues that can yield EBITDA profitability or even positive free cash flow.

We suggest that you download the following document and sit down for a nice long read:

Determination of Rates and Terms for Preexisting Satellite Digital Audio Radio Services

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