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Webcasters to file briefs in appeal this month

Posted on: 02/05/2008

From The New York Law Journal: Is internet radio destined to be silenced by royalty rates, despite its ever increasing popularity and growth?

According to many proponents of webcasting, the March 2, 2007, decision of the Copyright Royalty Board (CRB) to dramatically increase the royalty rate, by as much as 300 to 1,200 percent, will do exactly that. The decision highlights what many consider to be a flawed licensing structure that is neither technology neutral nor fair, in that it calculates royalties depending on how music is delivered, not based on the music itself…

Formally, National Public Radio (NPR) and others joined with Digital Media Association to file motions for a rehearing.

The [CRB] denied all [parties’ motions for rehearing], finding that there was no error in its underlying decision and that the motions did not introduce any new evidence that could not have been presented at the initial hearing…

The Board’s denial of the rehearing motions cleared the way for the webcasters to file an appeal before the U.S. Court of Appeals for the District of Columbia Circuit, which they eventually did.

Remaining Timelines

According to the timeline currently in place, the briefs of the various webcasters are due on Feb. 25.

The brief of the CRB, represented by the Department of Justice, is due on April 25, and SoundExchange’s brief is due on May 15. The reply briefs are due on June 12, but oral arguments have not yet been scheduled. Such a calendar suggests that the appeal will be decided at the end of 2008, at the earliest.

Until then, the parties may continue to negotiate and reach agreement outside of court, as has already occurred. SoundExchange, representing the music industry, has shown a desire to achieve separate agreements among the parties, rather than a comprehensive settlement that covers all parties…

The royalty rate legislation that is before Congress, if enacted, may ultimately nullify the Court of Appeals’ decision and any agreements SoundExchange has entered.

Still, what is needed is a rate structure that is technology-neutral

The current rate structure is technology biased. The royalty rates for terrestrial have long recognized the promotional value of traditional radio airplay to musicians and therefore provide an exemption to terrestrial radio for the payment of a performance royalty. In reality, the Internet provides far greater promotion for aspiring musicians because of its greater geographic reach, as compared to over the air radio. It is easier for unknown musicians to have their music played on an Internet station, and when it is played, the reach of that music extends well beyond the local city of the terrestrial radio station…

Further, whereas the Copyright Royalty Board used the “willing buyer, willing seller” standard to determine the royalty rate for webcasters, and set a rate based on a per performance basis, the CRB instead used the 801(b) standard of the Copyright Act to set a revenue based royalty for digital transmissions for satellite radio. As a consequence, with royalties between 6 and 8 % of revenues, satellite radio pays much lower rate than does Internet radio… It is hard to reconcile such disparate rate structures that the Board has imposed…

Internet radio is too great a resource, for all concerned parties – musicians, listeners, legislators, and even record companies – to allow it to fail under the weight of a royalty fee structure that is considerably higher and inconsistent with those that apply to the more established, and the better funded broadcast entities.

Read the entire article at the New York Law Journal.

Ed. Note: We’ve all been eager to learn the latest in Internet radio’s ongoing struggle to survive since last March’s CRB royalties determination. While all parties involved are keeping lines of communication open, there’s been very little movement in negotiations. Since news on the issue has been slow to emerge in recent weeks, this recap acts as a reminder of where things stand now and how they got here. Especially helpful is the list of linked sources at the bottom, including a piece called “Internet Radio – The Basics of Music Royalty Obligations” from law firm Davis Wright Tremaine.

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  1. Thank you much for this informative article and for the various references.

    Considering what was written above about negotiations, I continue to wonder why Congress doesn’t seriously consider enacting the Internet Radio Equality Act.

    Thank you again.

    Charlie · Feb 5, 03:00 PM · #

  2. Thanks for the article and it is amazing how the CRB can continue this unfair structure, we mus keep everyone informed.

    Tim Jackson Jr. · Feb 6, 07:32 PM · #

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