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RAIN 7/31: Hanson optimistic following hearing; Oxenford sees "glimmer of hope"

Posted on: 07/31/2008

HANSON’S ANALYSIS: SENATE JUDICIARY COMMITTEE HEARING WENT QUITE WELL: In yesterday’s issue of RAIN, Editor Paul Maloney expressed his disappointment in the caliber of Tuesday’s Senate Judiciary Committee hearing on “Music and Radio in the 21st Century: Assuring Fair Rates and Rules across Platforms,” calling it “just another sad episode in the now 18-month old-story.”

Frankly, I had a completely different take on the hearing. I thought, all things considered, it went quite well!

As I understand it, the hearing was originally scheduled by Senator Patrick Leahy as part of his efforts to expand the sound recordings performance royalty to broadcast radio. The hearing topic, “Assuring Fair Rates and Rules across Platforms,” is, I believe, music industry code language for extending royalty rates to the platform of AM/FM radio.

But they barely got a chance to discuss that topic! Basically, it became clear that the music industry is going to be unable to make any progress toward that initiative as long as Internet radio’s problems remain unresolved.

There was near-universal agreement among the senators and speakers (except, of course, for the record company representatives, who did not come off as credible) that the CRB decision, with its $500-per-channel “administrative fees” and effectively 75% to 200% royalty rates was a failure that needs to be unwound by legislation or negotiated away.

Furthermore, almost everyone seemed to agree that the “willing buyer / willing seller” standard for setting royalty rates was unworkable.

Perhaps most importantly, there was a magical moment relatively late in the Q&A when Sen. Feinstein seemed to have an “Aha!” moment after listening again to pro-webcasting recording artist Matt Nathanson. She said something to the effect of “this is a conflict between an old way and a new way.”

This conclusion was a huge win for webcasters. In essence, she was saying “this is not a conflict between those who create music and those services that use it; rather, this is a conflict between an old world and a new world — and in the new world many of those who create music see those services who use it as indispensable allies.”

A further implication of this conclusion is that the RIAA has been de-positioned from “the voice of the record industry” to “the voice of the old way.”

Finally, it was enlightening to see Senator Feinstein, whose bill, the PERFORM Act, tries to replace the 801b standard with “fair market value”, admit that she didn’t know what “801b” is! (And that was 45 minutes after Senator Wyden had read it into the record, right in front of her!)

OXENFORD: “GLIMMER OF HOPE” IN SENATE JUDICIARY HEARING: Industry lawyer David Oxenford saw a “glimmer of hope” for progress in the webcaster royalty rate debacle in Tuesday’s Senate Judiciary Committee meeting (RAIN coverage here and here). That glimmer came during the discussion of the standards by which compulsory license rates and terms are determined, specifically, the part of the Copyright Law known as 801b (see RAIN here for more).

Oxenford notes that during the hearing, SoundExchange’s executive director John Simson “actually broke ranks and stated that he did not rule out the use of the 801b standard.” Remember, webcasters and those supporting the Internet Radio Equality Act have long called for abandoning the “willing buyer / willing seller” standard that many blame for the untenably high CRB royalty determination, and want royalties set by the 801b standard widely and successfully used in other royalty determinations. However, Simson went on to say “that he thought that the standard would need to be tweaked to reflect current marketplace realities.” Simson argued tweaking is needed because of the “substitution” issue—the claim that listening to copyright materials through digital services is a substitute for actually purchasing the music.

Oxenford points out, however, that the conditions of the 801b system “already take that into account in assessing the ‘risks’ to various parties,” therefore no tweaking is needed. Though the record industry representative, Jeffrey Harelston of Geffen Records, was staunch in his support of the “fair market value” system and opposed 801b, Oxenford notes that record labels happily use the 801b standard when licensing compositions in order to manufacture recordings. “So if record companies and artists use 801b when it benefits them, shouldn’t the same standard be used when their product is the one subject to the license?“ Oxenford has detailed analysis of the Senate Judiciary hearing and a more thorough explanation of 801b and copyright theory at his Broadcast Law Blog here.

GOTRADIO’S FOUNDER VAL STARR’S STATEMENT TO THE SENATE JUDICIARY COMMITTEE: Several small commercial Internet radio stations, to ensure their viewpoints and interests were not lost amongst those of record labels, large media webcasters, and recording artists, submitted written statements for Tuesday’s Senate Judiciary Hearing on music royalties. RAIN will publish several of these statements this week. Tuesday, we ran AccuRadio founder (and RAIN publisher) Kurt Hanson’s statement (here) and yesterday we heard from Rusty Hodge, founder of SomaFM (here). We continue today with a statement from GotRadio’s founder Val Starr, excerpted immediately below:

My name is Val Starr, and I’m the founder and owner of GotRadio.com. GotRadio was launched in February of 2003. We are a professionally programmed network of internet radio stations, and are a premier content provider for Windows Media and iTunes. We currently have an estimated 250,000 monthly listeners, averaging over 1 million listener hours per month. GotRadio’s programming philosophy is to not niche down to hundreds of radio formats; however, we do feature many channels that have never been available to listeners on terrestrial radio…

Keep reading here.

AUDIO COMPRESSION MAY DEGRADE STREAMING SERVICES THAT USE YOUTUBE: YouTube has reportedly begun to “compress” the audio in the content it offers, and some say that will degrade the user experience for streaming services that use the site as a music source, such as Songza. The audio compression, as Wired’s Eliot Van Buskirk explains, “is not ‘compression’ as in bit rate or file format, but in the audio engineer sense of the word: the smushing together of various volumes into a smaller dynamic range.” For more, read Wired’s coverage here.

UPCOMING DELL MP3 PLAYER COULD FEATURE NET RADIO: Dell is reportedly preparing for a second foray into the Apple-dominated realm of mp3 players, this time perhaps including Wi-Fi access to Internet radio streams. The new players would use software Dell acquired from Zing, a company “that boasted wireless connectivity as a way of always being tuned to Internet radio, online music services and more.” Beyond the player’s capability for social networking, the Wi-Fi enabled Dell player would allow connectivity to Internet radio stations. The device, labeled Ditty, will reportedly be sold for under $100 and will hit shelves in September. Dell released their first line of mp3 players in 2003, but they failed to take off and the product line was abandoned in 2006. For more, read coverage from ZDNet here, from Statesman here, and The Washington Post here.

PART OF YAHOO’S Q2 $630K LOBBYING SPEND WENT TO FIGHT CRB DECISION: Part of Yahoo’s $630,000 spent lobbying in Washington during the 2nd quarter went towards lobbying Congress to overturn the Copyright Royalty Board’s webcaster royalty rate decision. Other issues included measures to prevent data and identity theft, proposals to stop spyware, and a move to make illegal U.S. Internet hosting companies sharing their users’ personal information with restrictive governments. For more, read Portfolio’s coverage here.



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Comment

  1. I wouldn’t be too encouraged by what John Simson said about 801b at the hearing. He’s shown a capacity to say what his audience wants to hear and then actually do something that has no relationship to his words. This is Congress we’re dealing with. They’ve never put great weight on the correlation between deeds and words anyway. It’s words that count there, and Simson knows it.

    The real reality test will be in seeing if he bothers to explain the “tweaking” he thinks 801b needs, now that his real audience, Senator Feinstein, admits she isn’t familiar with it. Given that revelation, it wouldn’t surprise me if Simson decides it isn’t worth “tweaking” something that she isn’t aware of, and he goes back to demanding a mythical “fair market standard.” There’s nothing to be gained by educating her about an alternative.

    Fred Wilhelms · Jul 31, 10:29 AM · #

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