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Copyright Ruling Sounds the Death of 'Net Radio

Will the March 2 decision of the U.S. Copyright Royalty Board raising royalty rates for Webcasts 30 percent mean the death of Internet radio? U.S. Rep. Edward Markey, D-Mass., thinks so. As CNET News reports, he testified yesterday before the House Subcommittee on Telecommunications and the Internet that the CRB's decision "represents a body blow to many nascent Internet radio broadcasters." That is also the conclusion of the Radio and Internet Newsletter, which did the math and found that the royalties an Internet radio station would pay would easily exceed any revenues the station might bring in.

Among bloggers, the decision likewise won no fans. Here is a sampling of what they are saying:

• Andrew Raff at IPTAblog:  "If the royalty rates are set so high that webcasters cannot afford to operate and pay artists, the webcast royalty pool may end up smaller than it is currently."
• Alan Wexelblat at Copyfight: "Nothing short of Congressional action is going to hale the Copyright Board's new rate structures."
• Erik J. Heels: "The Copyright Office's recent decision that Internet radio stations must pay higher royalty rates for music than broadcast radio stations is puzzling. The Copyright Office is propping up old broken technology (broadcast radio) at the expense of newer better technology (Internet radio)."
• William Patry at The Patry Copyright Blog: "The decision ... will, by the accounts within the industry, lead to the death of small, independent Internet radio. The noticeable swaying of these canaries before they die may also be a signal of the impending death of the present system of rate fixing, a system that has never worked, despite the expenditure of vast amounts of Congressional time on the issue and vast amounts of money by the affected parties."
• Bill Goldsmith at Save Our Internet Radio: "Crippling an exciting, groundbreaking industry like Internet radio is certainly not in the best interests of the public, nor that of musical artists, and not even - if history is any judge - of the music industry itself."
• Doug Isenberg at GigaLaw.com Daily News: "The board ignored the arguments of the International Webcasting Association and other webcasters, and apparently simply endorsed the proposal of the RIAA-associated SoundExchange royalty organization, which represents the major and some indie labels."
• Paul Fakler via Martin Schwimmer's The Trademark Blog: "It boggles the mind how a supposedly market-rate determination by the Copyright Royalty Board could end up with such a rate that no sane webcaster ever could have agreed to."
• Mike at Techdirt: The industry continues to think that it needs to do this because it wants to own all distribution and promotional avenues in order to be able to continue to take its large cut. However, that's no reason for the Copyright Royalty Board to put in place these artificial barriers that only serve to protect the recording industry's outdated understanding of its own business model.

The rate-setting authority of the Copyright Royalty Board is governed by 17 U.S.C. section 112.

Posted by Robert J. Ambrogi on March 8, 2007 at 12:14 PM | Permalink | Comments (0)

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