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RAIN 5/15: Radio royalty amendment would change standard for webcast rate setting

Posted on: 05/15/2009


RAIN has learned that, contrary to our analysis yesterday, the “Manager’s Amendment” to the Performance Rights Act (H.R. 848) would change the standard by which Internet radio royalties are determined, from the much-maligned “willing buyer, willing seller” to a slightly-altered version of the more widely-used “801(b)(1).”

The House Judiciary Committee on Wednesday voted to approve the Performance Rights Act of 2009, but not before the Manager’s Amendment was added (see RAIN here).

The main objective of the PRA is to allow performers and copyright owners of sound recordings to earn royalties from music played by broadcasters. But one facet of the amendment is a step towards “platform parity” in that it establishes the modified 801(b)(1) standard for sound recording copyright royalty setting for terrestrial, satellite, cable, and Internet radio.

Satellite and cable radio royalties are already set by arbitrators using 801(b)(1), a set of criteria which requires arbitrators to consider the fairness of their decision to both the copyright owner and copyright user. Internet radio royalty rates, on the other hand, under the DMCA, are currently determined with a standard called “willing buyer, willing seller.” With “willing buyer, willing seller,” instead of considering real world conditions and ramifications of their decisions, arbitrators are limited to consider only what they believe a hypothetical open market would arrive at.

Webcasters have long protested as unfair the fact that only their platform uses the “willing buyer, willing seller” standard, which many believe typically leads to royalty determinations more favorable to copyright owners.

As mentioned above (and reported yesterday), the “Manger’s Amendment” uses an altered version of 801(b)(1); one which removes the criterion that requires arbitrators to consider the possible “disruptive impact” their decision would have on involved industries. While some seem to be downplaying the significance of this change — at least for the purposes of Internet radio — industry attorney David Oxenford explains why he considers this point critical in his Broadcast Law Blog here.

For more background on the significance of the 801(b)(1) standard (and especially the “industry disruption” point), see Oxenford here. For more on why 801(b)(1) is preferable to “willing buyer, willing seller,” see Kurt Hanson’s essay “Copyright Law and the CRB: What Went Wrong?” here.


On Monday Ford will update their Sync voice-activated service, which will soon enable webcasters like Pandora to deliver Internet radio to cars. Ford expects to update the service in 9 to 12 months to possibly deliver Pandora streams to a car’s audio system. The upcoming May 18 update delivers information about traffic, directions, stocks and weather through voice-activated commands, all using the voice line of a Bluetooth-connected mobile device (data usage charges are avoided this way). For more on Sync’s updates, check out Twice’s coverage here.


Pandora is on the look-out for “hero devices” in the mobile world, said CEO Joe Kennedy in an interview at the EconnSM conference in San Francisco. The iPhone, Blackberry and upcoming Palm Pre devices all fit this description, as they all have “a truly great experience in which every piece of the puzzle works.” Pandora is holding off on an application for Android phones though, because those devices lack standard audio jacks and other features that make audio listening an easy experience. Kennedy said upcoming Android devices have these features however, so they’re “high on the watch-list” for Pandora. Kennedy also said that Pandora is speaking with automakers to bring the service’s streams to dashboards, though only Ford has publicly announced their plans to include Pandora with their Sync service (see story on Sync above). To watch a video of Kennedy’s interview, head to Vator.tv here.


Though iPhone and Blackberry users can connect to web services like Internet radio wherever they have a cellular signal, they are usually limited to only use applications on that specific mobile device. A new gadget from Novatel called the MiFi 2200 opens things up a little. It connects to a Sprint or Verizon cellular network and converts that signal into Wi-Fi, allowing any Wi-Fi device to connect online wherever there’s a cellular signal. Additionally, the device is powered by rechargeable batteries that run for 4 hours of continued use (40 hours standby) and it’s about the size of “triple-thick” credit card, allowing you to bring your personal Wi-Fi hotspot wherever you go. With the MiFi 2200, you could tune in to Internet radio with any Wi-Fi enabled device, not just your mobile phone. The New York Times has more on the MiFi, including price and plan rates, here.

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