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Wilhelms: "Fair and reasonable" misleading characterization of CRB

Posted on: 05/15/2007

fred wilhelmsFrom P2PNet: "The imposition of the ruinous rates set by the Copyright Royalty Board (CRB) on webcasters has been postponed until July 15 from May 15. This gives everyone a little breathing room, and a chance to sort out where everyone stands.

"There are multiple fronts in this critical battle. Judicial appeals from the CRB ruling have already been filed by some webcaster groups, and others expect to join in before the deadline this week. A number of observers believe that the court will immediately stay the effect of the new rates. That restraining order could come as early as June 1, well ahead of the effective date of the CRB decision…

Congress has a right to fix
underlying problems in process

"…[T]here’s the battle over IREA… The webcasters should be encouraged… by the intensity of the counter-rhetoric being put out by SoundExchange  as more representatives sign on…

"In a piece that ran last week on BusinessWeek.com [RAIN coverage here], John Simson said: ‘In short, the CRB did what Congress asked it to do,at the behest of Webcasters. But when the CRB set what it judged to be fair and reasonable royalty rates, the Webcasters decided they were too high, cried foul and denounced the very process they had sought.’

"The statement is misleading on several levels.

"Ostensibly, fair processes sometimes bring about unfair results. Sometimes, what looks on the surface to be a fair process turns out to have some underlying problems that skew the results or have consequences that were unanticipated when soundexchangethe process was set up. That’s why appellate courts exist. That’s why we have the right to petition and recall. That’s also why Congress is given the power to amend previous laws

"Those peculiar criteria the CRB applied were established by Congress in the DMCA. Despite Simson’s wrongheaded insistence, there’s nothing in the DMCA that requires the CRB to consider whether or not the rates were ‘fair and reasonable.’Instead, the DMCA says riaathe CRB shall set ‘rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller.’

"There’s nothing intrinsically ‘fair and reasonable’ about that market standard. Given the unequal bargaining power of buyers and sellers in the relevant marketplace, it’s no wonder that, by applying the standard, the CRB came up with rates thatwill drive most of the ‘buyers’ off the air…

"The CRB did its appointed job. It applied the standards the DMCA required it to, and it didn’t dmcacare whether or not the impact of the decision was ‘fair and reasonable.’..

"Congress is completely within its rights to review what it did a decade ago and determine if what they did was right, and if they did it the right way. The webcasters, large and small are completely within their rights to seek redress from Congress, even if John Simson thinks it’s unfair of them to challenge the CRB. SoundExchange would have Congress ignore the sheer idiocy of charging license fees greater than the aggregate revenue of the entire industry just because the CRB followed the existing law in setting those fees."

Fred Wilhelms is an entertainment attorney based in Nashville, Tennessee. The second part of the above article will appear in tomorrow’s issue of RAIN.

Read Wilhelms‘ entire article at P2PNet here.

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