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RAIN 6/12: Tide turning on radio royalties; Rep. speaks for webcasters; AOL, CBS Radio on iPhones

Posted on: 06/12/2008

WEBCAST RATES ENTER RADIO ROYALTY DEBATE: While debate over terrestrial radio performance royalty fees raged yesterday, at least one member of Congress held an open ear to internet radio’s pleas—Rep. Zoe Lofgren (D-CA) (pictured) expressed a desire for congressional action to change net radio’s performance royalty rates. She stated, “The industry that’s really in trouble today is Internet radio.” Her position may be due to Pandora and other webcasters’ lobbying efforts. Pandora’s chief executive Joe Kennedy and founder Tim Westergren have both been making the rounds at Congress, trying to persuade legislators about the disparity between net and satellite radio royalty fees. Westergren has declared that 70% of Pandora’s revenue would go towards paying performance fees (RAIN coverage here), meanwhile satellite and cable radio pay between 6% and 15% of their revenue. Kennedy also expressed expectation, in an interview in the Washington Post’s blog (here), that other webcasters such as LIVE365 and AOL Radio will now “beef up their own lobbying efforts.” For more read CNN Money’s coverage here.

TIDE TURNING TOWARDS RADIO ROYALTY IN CONGRESS, ADMINISTRATION: Yesterday, the Congressional Subcommittee on Courts, the Internet, and Intellectual Property heard arguments for and against a performance royalty fee for terrestrial radio (RAIN coverage here and here), proposed by the recording industry which hopes to collect more revenue in the face of dwindling record sales. Despite broadcasters’ arguments that such a royalty would hurt radio profits and cut down on music sales, it would appear legislators are siding with the recording artists. Rep. Sheila Jackson (D-TX) stated, “this system [of non-payments by terrestrial radio] is broken and we need to fix it.” Indeed, observers note that “most on the House panel appeared to back [the] legislation.” RBR.com bemoans (here) that “this is a bill that will in fact have some legs,” due to the fact that even legislators on the fence about the issue will probably side with the artist. However, the article also reasons that much more debate and discussion will have to take place before this bill becomes law, and that even if it does end up in front of the President for signing, “we’d guess there’s a good chance that the harm to broadcasters may be mitigated, or at the very least delayed.” Despite more than 200 legislators signing a resolution opposing the bill, the sponsor of the performance royalty fee bill and chairman of the subcommittee Rep. Howard Berman (D-CA) reportedly believes he has enough support to pass the measure, and wants the House of Representatives to vote “in the coming weeks.” For more, read R&R’s coverage here. Additionally, the Department of Commerce, in a letter to Berman, claimed such a royalty fee would be “fully justified by bedrock principles of U.S. copyright law.” The letter (here) reestablishes the DOC’s 1978 position about performance fees, claiming that such a fee is in the “long-range economic interest of all parties,” both artist and broadcaster. “The DOC believes that the changes in the legislation are justified as a matter of fairness and equity.” For more coverage read Radio Ink’s article here.

AOL DEVELOPS IPHONE APP TO STREAM NET RADIO, INCLUDING CBS RADIO: AOL was awarded the “Best Entertainment Application” for its soon-to-be-released AOL Radio for iPhone.” According to AOL, the new app will indeed give “users immediate, free access to over 350 online radio stations, including 150 local CBS RADIO stations and custom channels plus more than 200 AOL Radio channels.” The service is designed to provide both low-bit rate streams over the “cellular network” and higher-quality streams over Wi-Fi connections. AOL says the program “leverages iPhone’s Core Location framework to detect a user’s location and automatically display CBS RADIO stations nearest to the user.” The press release doesn’t make clear what the application of this is (are only “nearby” CBS Radio stations available to stream? Or, are they merely “featured?”). The AOL Radio for iPhone application will be available (though no date was given) as a free download from Apple’s soon-to-launch App Store. Finally, the press release (available here in its entirety) gave no indication as to the streaming platform used, or what the user experience might be like. Finally, there’s also reportedly a new “jailbreak” app that allows iPhone users to receive Sirius Satellite Radio’s streamed channels. Read more on that here.

ONLINE RADIO CONSULTING SITE LAUNCHES: RadioStreamHost.com, a consulting site for broadcasters trying to transition online, has officially launched. The site, a service of Broadcast Matrix LLC, has been under production for two years. Along with streaming solutions, the site will offer broadcasters webhosting, audience metric data, social networking tools, and an overall digital strategy amongst other tools. Said Broadcast Matrix President & Founder Ron Erak, “Radio stations need innovative ways to leverage and profit from the internet. We find solutions, develop strategies and provide the tools they need while finding them ways to lower costs.” For more read Radio Business Report’s coverage here.

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  1. I recently read the Department of Commerce letter to Chairman Howard Berman, but I am particularly confounded by the abundance of mixed messages concerning the public performance right in sound recordings.

    The Department of Commerce claims that H.R. 4789 will for the first time fill the gap in U.S. Copyright Law by providing a full performance right to sound recording copyright holders — a phrase that is reiterated several times to establish the legal significance of this amendment. However, the most misleading and perhaps fallacious assertion follows:

    “As amended, the Copyright Act would treat the owners of copyrights in all performable works alike, thereby bringing to an end the historic disparate treatment of owners of copyrights in sound recordings.”

    This is simply not the case because the Performance Rights Act is exclusive to broadcast transmissions, which does nothing more than maintain the extant anomaly between sound recordings and other performable creative works within the bundle of exclusive rights. Not to mention, such an amendment would again place the United States at odds with other industrialized nations which in fact do recognize a full public performance right for sound recording copyright holders — beyond just terrestrial, satellite, cable, and Internet radio. Extending the performance right to non-digital broadcasts is a step in the right direction, but certainly not the final step.

    Under the proposed legislation, any business that does not perform sound recordings by means of a digital and analog broadcast transmission remains exempt from these royalty obligations to sound recording copyright holders and recording artists. For example, nightclubs and discotheques — a still growing multi-billion dollar U.S. industry — derive the vast majority of their revenues from the public performance of recorded music. Yet, notwithstanding this disparity, these and other entertainment businesses can continue to reap the rewards of recorded music without compensating sound recording copyright holders for the exploitation of their works.

    While I commend the DOC for acknowledging the importance of platform parity in broadcast royalties, the Performance Rights Act is not the final solution toward correcting the “longstanding asymmetry” in public performance rights. I sincerely hope that Chairman Howard Berman and the other committee members will take this matter into consideration during their review of H.R. 4789.

    Randall Krause · Jun 16, 10:17 AM · #

  2. Those are fascinating distinctions, and I’ve no doubt that their nuances are properly appreciated by the recipients of your correspondence.

    At the same time, the article cited in RAIN reported that 219 members of the House co-sponsored the Local Radio Freedom Act, as sponsored by the NAB.

    Should the House fail to enact H.R. 4789, and until and unless the United States enacts such a law, or even a law that remedies the flaws you correctly mention, the reality that terrestrial radio in this country is exempt from remitting royalties for the broadcasting of recorded material will continue to obtain, however unfairly one deems such a scenario or however unfairly the international community perceives such a situation.

    For better or for worse, the NAB cites studies it avers
    support its argument that the broadcasting of music promotes the sales of music. The view espoused by representatives of the NAB is the decline in record sales that has occurred during the past nine or ten years is the responsibility of the recording industry and that record sales would be significantly fewer in the absence of the broadcasting industry’s promotion of music.

    One may agree or disagree with this view. However, as long as the NAB prevails in Congress and obviates the passage of a law like H.R. 4789, terrestrial radio will retain its exemption.

    The longer that exemption continues, the more likely other broadcast media will lobby Congress to redress the lack of parity that already exists in the DMCA.

    I am sure many in the RIAA would embrace and appreciate the use of the word “exploitation”. And I’m sure that as more laws between various countries become “harmonized”, the impetus to enact a law like H.R. 4789—preferably, one would hope, a bill that would contain the modifications apparently you seek—will grow.

    Still, rarely in politics or in economic spheres, as in life itself, do things move in such a linear manner.

    I suppose we shall see how these matters develop.

    In the meantime, I urge all those who are involved in Internet radio to lobby members of Congress to enact as soon as possible the Internet Radio Equality Act (H.R. 2060 in the House and S.1353 in the Senate).

    Charlie · Jun 27, 07:52 PM · #

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