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Small Webcasters Sue RIAA
killthiskid writes "The Webcaster Alliance, a small group of 198 webcasters has sued the RIAA. CNET has the news, along with a growing number of other sites (google news). As many /.'ers know, in 2002 the Library of Congress decided on .07 cents per song (retroactive to '98). After that another bill was passed to protect smaller webcasters. Aparently, many webcasters are still not happy." Their complaint is online.
COMPLAINT
Perry J. Narancic, SBN 206820 LEXANALYTICA, P. C.
160 West Santa Clara Street Suite 1100
San Jose, CA 95113 Tel: 650-814-7688
Fax: 650-618-2700
Attorneys for Plaintiff WEBCASTER ALLIANCE, INC.
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
Webcaster Alliance, Inc.
Plaintiff,
v.
Recording Industry Association of America, Inc., Universal Music Group, Inc., Warner Music Group,
Inc., Bertelsmann Music Group, Inc., Sony Music Entertainment, Inc., Capitol-EMI Music, Inc.
Defendants.
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Case No.:
COMPLAINT
(1) Unlawful restraint of trade in the market for domestically copyrighted
sound recordings (Sherman Act § 1)
(2) Illegal maintenance of monopoly in the market for domestically copyrighted
sound recordings (Sherman Act § 2)
Demand for Jury Trial
Plaintiff alleges as follows:
I. NATURE OF PROCEEDINGS
1. This is an action brought under the antitrust laws of the United States to restrain
anticompetitive conduct by the Defendants which threatens to injure Plaintiff and its members as
a result of Defendants' exclusionary conduct in the markets for domestically copyrighted sound
recordings and Internet distribution of such sound recordings.
2. Plaintiff is a trade association whose members are engaged in the business of
Internet radio, also known as webcasting. Webcasting is the Internet equivalent of terrestrial radio 1
2 COMPLAINT
whereby digital data is transmitted in real-time, without downloading any physical files. But
unlike the broadcasting of signals in traditional radio, Internet radio involves the transmission of
streams of data to an individual listener.
3. Internet radio is a vital form of media that allows ordinary individuals to transmit
ideas, music, opinions and other content to an international audience. Like traditional terrestrial
radio, Internet radio is an important medium that allows for the free expression of ideas, news and
opinion. However, the commercial success of Internet radio as a viable line of commerce is
dependent on securing access to suitable content, which is subject to the intellectual property
rights of its owners.
4. To allow for the growth of this medium, Congress enacted the Digital Millennium
Copyright Act of 1998 (" DMCA") to provide certain non-subscription Internet radio stations
with a compulsory license to perform copyrighted sound recordings. Under the DMCA, the
royalty rates for such compulsory licenses can be established by either a voluntary agreement, or
failing such voluntary agreement, the Copyright Office may initiate a Copyright Arbitration
Royalty Panel (" CARP") in order to establish such rates.
5. A CARP proceeding commenced in April 2001 to establish royalty rates for Internet
radio for the period October 28, 1998 - December 31, 2002 (the "CARP")
6. The Recording Industry Association of America, Inc (" RIAA"), a trade association
controlled by the five major labels who account for over 80% of all domestically copyrighted
content produced and distributed in the United States (the "Major Labels"), acted as a negotiating
agent on behalf of its members in the CARP proceedings.
7. The CARP submitted its report to the Librarian of Congress on February 20, 2002,
which report included certain recommendations as the appropriate webcasting royalty rates. (the
"CARP Rates").
8. However the Librarian of Congress rejected, in part, the CARP report, and the
Librarian of Congress set the rates in a final order that was announced on June 20, 2002, and
which was published on July 8, 2002 (the "LOC Rates") 2
3 COMPLAINT
9. The LOC Rates were primarily based on the royalty rates that were agreed to in a
licensing agreement between Yahoo, Inc., the second largest commercial webcaster in the world,
and RIAA (the "Yahoo Agreement"). In his July 2002 f
The complaint goes like this:
Prior to when the current webcaster royalty rates were determined, the RIAA met with Yahoo! to work out rates seperate from those put forth by the Librarian of Congress, or LOC. The LOC, in turn, used the Yahoo! rates as the baseline for a "fair market" royalty value.
A similar case occured between SoundExchange (a wholly owned subsidiary of the RIAA) and the Voice of Webcasters (VOW) organization, except that the rate was now four times what the Copyright Arbitration Royalty Panel (what the LOC based the final decision on) had deemed okay.
The lawsuit alleges that the RIAA unfairly inflated the Yahoo! royalties to the point where they would not legitmately be a 'fair market value'...it was price-fixing, with Yahoo! as (possibly) an unsuspecting ally.
But what about Voice of Webcasters? Good question. The suit also claims that the RIAA/VOW negotiations were in bad faith on the part of the RIAA, and that the RIAA forced those VOW members who remained for the entire negotiation to enter into an agreement, later encoded into law as the Small Webcaster Settlement Act of 2002, that would make it even harder for webcasters to survive.
Basically, the Webcaster Alliance wants the RIAA to be barred from enforcing their copyrights against webcasters until a legitimate, non-abusive rate can be found, and that the RIAA pay for their legal fees.
They're also asking for a jury trial. IANAL (duh), so I don't know if that's a good or bad idea.
I mod down anyone who uses M$ in their posts. I like to live on the edge.
Actualy, no, you are entitled to play the songs to the general public. The whole point of CARP is to mitigate the restrictions inherent in monopoly control. Remember, copyright is an artificial monopoly that is ostensibly intended to encourage creativity. The problem is that, perversely, copyright discourages dissemination of valuable ideas if the owner of those ideas loses interest in exploiting them, or perversely refuses to license them. The CARP is a kludge designed to fix that problem, by forcing content providers to license their content to anyone at a reasonable rate.
Actually, it wouldn't.
The RIAA's subsidiary, SoundExchange, is currently the sole designated agent for collection distribution royalties, as per the U.S. Copyright Office.
What this means is that SoundExchange, a.k.a. the RIAA, is authorized to collect on behalf of all copyright holders. Even those who aren't members of the RIAA proper.
To put it another way, even if I were to start a band, and a Shoutcast station devoted solely to my band, or to local unsigned bands throughout my city, the RIAA (as SoundExchange) could knock on my door and demand royalties! And since none of us are members of the RIAA, we wouldn't see a red cent!
This is just a taste of the asinine legislation currently binding webcasters thanks to the RIAA's powerful lobbying power.
Ahh yes, the RIAA member companies own the copyrights, but the playback rights belong to the songwriters. Those are collected via ASCAP/BMI and don't go to the labels. Here's how it worked in the past:
Analog stations paid ASCAP/BMI
Digital stations paid ASCAP/BMI
Now here's how it works:
Analog stations pay ASCAP/BMI (and get payola, that's another story...)
Digital stations pay ASCAP/BMI AND the RIAA (because when you listen to a digital station, it's like them giving you a copy of the song, so the station has to pay for every user's piracy, no, really, that was the RIAA's argument to get the law passed)
Sound fair? Nope. If an analog station had to pay the royalty rates they want digital stations to pay they would go out of business. Running a digital station costs just about as much as running an analog station of the same size (bandwidth/severs vs towers/amps/huge fcc license fees), so why should special rules be made for internet broadcasters? Because there are more of them than the RIAA can control with payola, and this is a threat to them.
People whine and complain about the RIAA all the time, the only real way we have to shut them down is with the mindshare of the people. If you want the mindshare of the people, we need independent internet radio to ween society off the RIAA.