 RAIN 3/20: Attorneys argue during webcast royalty appeal that Library of Congress' CRB appointments unconstitutional ·Mar 20, 01:03 PM AS WEBCASTERS APPEAL ROYALTY RATE, ROYALTY LOGIC ATTACKS CRB LEGITIMACYThe U.S. Court of Appeals for the D.C. Circuit yesterday heard the opening of oral arguments in webcasters’ appeal of the Copyright Royalty Board’s determination on royalties. The hearing was intended to focus on the soundness of the CRB’s 2007 Internet radio royalty rate decision, but attacks on the CRB’s constitutionality raised by Royalty Logic appear to have stolen the show.
Kenneth Freundlich, the attorney representing Royalty Logic, argued that the three CRB judges are sitting in violation of the appointments clause. He said the judges, who were appointed by the Librarian of Congress, are “inferior officers who can only be appointed by the president, the courts, or a department head.” Because the Librarian of Congress is not part of the courts nor is a department head, he or she cannot make appointments and therefore the CRB is not constitutional. Royalty Logic originally challenged the CRB’s constitutionality in a motion to the federal Appeals Court in May of 2008 (RAIN CRB representative Mark Freeman of the Justice Department Civil Division said the Librarian of Congress is, in fact, a department head. Freeman said the Librarian of Congress is part of the Executive Branch — not the Legislative as commonly believed — because he or she reports directly to the President. This would make any appointments by the Librarian of Congress — the CRB included — constitutional under the appointments clause. The Court of Appeals’ judges found If the CRB is found to be unconstitutional, “it could wipe out all CRB decisions” including the current Internet radio royalty rates, according to Billboard senior correspondent for legal and publishing issues Susan Butler (RAIN coverage here). Regardless of the CRB’s constitutionality, the Court of Appeals “still must decide whether the royalty fee structure is sound and whether an increase in fees was justified,” according to the Legal Times’ Arguing against the rate decision were Wiley Rein, representing noncommercial webcasters, and David Oxenford (pictured left) representing small commercial webcasters. This may be webcasters’ last chance at overturning the CRB’s high royalty rate decision, outside of a negotiated settlement with SoundExchange. B’DCASTERS WORRY ABOUT CRB BIAS IN WAKE OF WEBCAST DETERMINATIONA collection of radio representatives and music industry insiders discussed the possible broadcast radio performance royalty at a SXSW panel titled, “Should Artists Be Paid for Radio Airplay.” Radio representatives argued against the royalty, questioning the fairness of the CRB who may set the royalty rate. They see the board as biased towards music labels and asked, “Why else would so many webcasters be struggling to stay afloat while paying the CRB-decided rates that apply to them?” according to Wired (here).
“We have absolutely no faith [in] the Copyright Royalty Board,” said Scott Gillmore of Emmis Communications. “Broadcasters basically have no leverage there, and we’ve been able to do nothing in terms of telling our piece there… it’s not a willing seller/wiling buyer exchange there — it’s a government board that appears to be in the pocket of major labels.” Musicians and SoundExchange chief Jon Simson argued for a royalty. “We make music that is played, and we are not compensated for it…The basic right to this performance [royalty] is irrefutable,” said musician Roy Benson. CADILLAC ANNOUNCES IN-CAR WI-FI OPTION Cadillac’s CTS sport sedan will come with an in-car Wi-Fi Internet option starting in April. The service is provided by AutoNet, and will cost $29 a month. Internet is provided through a Wi-Fi router, which is listed at MSRIP of $499 (MSRP). BMW and Mercedes are also pursuing in-car Internet access. For more, check out CNET’s coverage here.
STUDY FINDS GENERAL AWARENESS OF LEADING WEBCASTER DOUBLED IN PAST YEAR The NPD Group reports that awareness and usage of Pandora doubled YTY to 18% of Internet users in 2008. 33% of those aware of the service used it. Meanwhile, digital music sales increased 29%, while the number of Internet users paying for digital music increased by just over 8 million in 2008. For more, read ZDNET’s coverage here.
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the issue “fascinating,” but were reportedly hesitant about “rushing in to what was collectively deemed a ‘monumentous’ decision in declaring that the judges of the Copyright Royalty Board are sitting in violation of the appointments clause.” 
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