U.S. Court Denies Webcasters' Stay Petition

Michael Manoochehri writes "Reuters reports that a "federal appeals court has denied a petition by U.S. Internet radio stations seeking to delay a royalty rate hike due July 15 they say could kill the fledgling industry." This royalty rate hike, put forth by the US Copyright Royalty Board, will increase royalty rates for webcast music tremendously, in some cases to more per year than many webcasters bring in from revenue. Save Net Radio, a coalition of webcasters, is telling listeners that "We are appealing to the millions of Internet radio listeners out there, the webcasters they support and the artists and labels we treasure to rise up and make your voices heard again before this vibrant medium is silenced.""

Comments

What, you're shocked?-Naked truth.

[Anonymous Coward]

Depends on how you define "wins".

Re:Sorry but you play with fire and you get burned

[Cousarr]

The problem is that webcasters can't even do this. July 15th the royalty rate hike goes in effect for songs played up to a year ago. On this day even if all webcasters switched to open music, many of them would go bankrupt.

Vote them out

[willow]

I've let both my Senate and House reps know that 1) I vote, contribute $$$, and 2) This issue is important to me and 3) I have influence on my voting friends on technical issues and 4) I will be very unhappy if they fail to represent my interests. Yes, this includes paper, online petitions, email, and phone calls.

While no single issue would cause me to actively campaign against an incumbent I like, I still want them to know that I'm watching what they do and will actively work against them if they don't consistently stand up for my interests. It's too bad we can't force a re-election on newly elected reps that don't deliver.

Corporations can't vote. Remind your reps of this.

Sound exchange says they won't enforce it

[Asmor]

http://blog.wired.com/music/2007/07/breaking-news- o.html

Just saw this posted on Fark. Sound Exchange, who I'm assuming are the people set to collect all the royalties, vowed in front of Congress not to enforce this against internet radio until new rates are worked out.

Re:Sound exchange says they won't enforce it

[rizzo320]

By the way, here was what was sent out to NPR/CPB funded stations:

Dear Colleagues,

As you know, the music that public radio stations use on air and over the Internet typically requires licenses from the different copyright owners and payments of copyright fees.

Record labels are represented by the RIAA (The Recording Industry Association of America). RIAA in turn uses the non-profit SoundExchange to negotiate streaming rights with webcasters (including public radio stations). If parties are unable to reach an agreement through negotiation, an independent administrative tribunal called the Copyright Royalty Board ("CRB") has the power to mandate a rate that covers Internet streaming. As we advised you last year, the agreement that we had to cover public radio's web streaming expired at the end of 2004.

Since then, CPB and NPR have been in negotiations with SoundExchange for a license to stream. When we were unable to reach an agreement, the issue of our license fee was referred to the CRB. The CRB issued a decision that set a rate structure that we believe was very unfavorable to public radio and failed to account for the noncommercial, public service nature of our music streaming. We have appealed the CRB decision to the U. S. Court of Appeals for the District of Columbia. The appellate review will take a considerable amount of time, probably a year and half, perhaps more.

The CRB decision included a requirement that back fees be paid by July 15, 2007. We made a motion for a stay in the royalties fees but yesterday the U.S. Court of Appeals denied that motion. While we were disappointed in that decision, we were not surprised. There was a slim chance the stay would be approved but it was worth venturing.

Meanwhile, NPR and CPB continue to negotiate with SoundExchange in the hope of achieving a system-wide settlement that recognizes the special noncommercial, public service nature of public broadcasting. Thus far we have been unable to reach an agreement. Our next discussion is scheduled for this Friday.

Because of conflicting provisions in various statutes and regulations, there is some confusion about what payment is actually due on July 15th. CPB and NPR believe that only base fees for 2007 are required to be paid on July 15th. We believe that fees for 2005 and 2006 are not payable while our appeal is pending. To comply with this requirement, CPB will offer the Sound Exchange a payment tomorrow that we believe covers the base fees of public radio that are due for 2007. You should seek your own outside counsel if you have concerns about what fees are due on July 15th.

We believe that our payment to satisfy the July 15th obligation will signal to the SoundExchange our good faith and encourage them to consider compromises on the issues that separate us. However, it is possible that Sound Exchange disagrees with our view of what is owed on July 15th and seek payment for fees from 2006 and 2007. In addition, SoundExchange may also pursue additional fees from the few stations that we believe exceed the usage cap included in the base fee. As we have indicated previously, these fees are station obligations that CPB covered through the end of our previous agreement. CPB cannot yet guarantee payment of additional fees given that the size of these fees is yet unknown. If you have concerns about any of this, you should consult outside counsel or, if you are an NPR member, NPR for assistance. Please note that CPB cannot provide legal advice to other parties, including stations.

Thank you for your patience as we work through this complex and difficult situation. We will keep you informed to the extent that confidential negotiations permit. In the meantime, realizing that each station must reach its own conclusions, we believe that it is critical that the public radio system stand together at this time. NPR recommends that stations not enter into individual agreements with SoundExchange

It's their music ... except when it's not.

[Kadin2048]

I think you need to do some research on the issue.

This isn't just a dispute between the recording industry and some radio stations. If it were, it would be settled according to contract law and that would be the end of it.

SoundExchange has been granted a special distinction -- a monopoly, in fact -- by the government (in the form of the Copyright Office), allowing it to sell special 'blanket licenses' to broadcasters. These licenses allow a broadcaster to play whatever sort of music they want, without having to worry about getting permission from each individual artist. They are an absolute requirement in order to broadcast music, either terrestrially or digitally, unless you stick only to the very tiny minority of music that's freely licensed, or you negotiate individual licenses with each rights-holder (which is not only the artist, but could be the person with the rights to the score, the rights to the lyrics, etc., in addition to the recording itself), which is obviously impractical on anything but a trivial scale.

SoundExchange is the only place that one can go to for this, by law. Therefore, I think it's entirely reasonable for people to protest the rates that they charge, since they were granted their entire business by the Copyright Office, which is a government agency. SoundExchange is allowed to speak for all artists, and license the copyright to all artists' music, only because the Copyright Office says they can. They don't "own" the music they purport to represent; it's not "theirs." They don't own the rights to anything.

Re:Sorry but you play with fire and you get burned

[Anonymous Coward]

The RIAA collects royalties for open music as well. It doesn't matter if the musicians are RIAA members or if they don't want the RIAA to collect the money. The only way to bypass this would be to play open music from foreign counties only, and even this is questionable. It's possible the RIAA is authorized to collect royalties for foreign music played in USA as well. All this is made possible by your corrupt congress and senate. Enjoy.

internet radio...

[Caseyscrib]

I'm going to be upfront about this - I never listen to online radio. I sometimes listen to streaming talk radio, so I'm familiar with the medium, but I've really just never paid attention to it. I do vote though and I do believe its important to keep people involved in politics. I checked out the savenetradio.org just now and to be honest, I was a little disappointed. While their arguments are valid, they are not expressing them in a way that is going to make people care about the issue. For example, on their Myths and Facts page, the first paragraph explains how the decision by the CRB "will affect millions of Americans who enjoy the unparalleled radio diversity that is only available on the Internet; and hundreds of thousands of artists who depend on Net radio to reach new fans, and thousands of webcasters whose livelihood depends on their ability to play music for their listeners."

I'm not in any 3 of those categories, so why should I care?

The next argument is that the smallest medium - Internet radio - pays the most royalties; and under the new CRB royalty scheme the smallest webcasters will pay the highest relative royalties in amounts shockingly disproportionate to their revenue. While I can certainly see where their coming from (to be honest, it looks the whole point of the ruling is to kill internet radio), it reads as "WHY NOT ME" talk. Why shouldn't ALL mediums have to pay?

About half-way through the page, they make a good argument that somebody on either side of the debate can agree with:

Bankrupting the Internet radio industry will not benefit artists or record companies, as total industry royalties will diminish. Moreover, the demise of Internet radio will be particularly harmful to independent artists and record labels whose music is rarely played on broadcast radio. The American Association of Independent Music reports that less than 10% of terrestrial radio performances are independent music but more than 37% of non-terrestrial radio is independent music. This benefits artists, labels and music fans.

When Congress provided webcasters a guaranteed "statutory license" to perform sound recordings, Congress intended that Internet radio would flourish as a competitive medium offering diverse programming and paying a royalty. Tripling webcasters royalties undermines all these goals.

If this was the true intent, I think this is important because it guarantees there will be competition. People realized how crappy FM radio got when Clear Channel bought all the stations. It wasn't that long ago that stations started going independent again - so remind people of that! Competition means better selection!

Furthermore, I have no idea where technology will take us. Its evolving so quickly now that everything could very well be wireless and connected in 10 years. I'm going to be angry that if in 10 years, the selection of internet radio stations is terrible and the cost to enter the market is insane because of a bad decision that was made in 2007.

Finally, we need to recognize that the Copyright Royalty Board is going to get away with murder. I didn't realize this until I did some further research on this, but do you know how many people the CRB is composed of? Three. Three judges are going to decide the future of internet radio that will affect millions of people. What an awful system! I saw we put pressure on the CRB (James Scott Sledge (Chief Copyright Royalty Judge), Stanley Wisniewski, and William J. Roberts.) and congress to make this a more fair system. Three people having that much power is not a fair game.

Re:I don't think I even care about this...

[BlueStrat]

So why don't the net radio guys and these independent unsigned bands get together and come up with their own terms for royalties?

Simple answer, the Copyright Royalty Board gave SoundExchange a legal monopoly which prevents it, so I understand. The broadcasters, in order to avoid paying standard royalties to SoundExchange for some unsigned indie band or artist, must obtain an individual license from each band or artist. They must then register this license with SoundExchange. I can see an administration nightmare for a small webcaster to attempt to track all the individual licenses, and keep SoundExchanges' database on their stations' licenses current.

If the artist and broadcaster doesn't file (hmm..filing fees?) a license, the broadcaster must pay standard royalty to SoundExchange, and the artist or band may collect it, *if* they pay a fee and join SoundExchange.

Not sure if the band or artist can find out how much has been collected in their name before registering and paying the fee, though. Seeing the way things have been so far, I wouldn't doubt that the band or artist wouldn't be allowed to know what funds were collected before paying. I could imagine a scenario like this:

SoundExchange to band/artist: "Congratulations! We've received your payment of $XXX.XX, you are registered and now eligible to receive the royalties we've collected for you, totaling, minus administrative fees, taxes, handling, and surcharges, of $0.0X.!"

Strat

what about college/community radio?

[johnpaul191]

while some startup station may be able to "broadcast from overseas", but any college or community station is still screwed. there are some college stations these days that do not even broadcast on FM due to budget reasons. they are all done.

Re:Copyright is expired on that one

[slashqwerty]

Taps was composed by Daniel Butterfield in 1862 during the U.S. Civil War. He died in 1901, so under current copyright law it would've entered the public domain in 1971. If it was considered a work for hire, the copyright would've been valid for 120 years, which would mean it entered public domain in 1982. (This is just worst-case. It probably entered public domain before then.)

In 1862 copyright lasted 28 years with a possible 14 year extension. The law did not change again until 1909. So Taps would have entered the public domain in either 1890 or 1904.

For reference, see this legal brief from Eldred v Ashcroft. The relevant part starts at paragraph 61.

Re:Killing the goose that lays the golden egg.

[rubberglove]

When artists don't get paid properly, they cannot spend the amount of time they need to to make great work. Not only that, it's insulting to suggest that some artists shouldn't be paid a great deal of money when their work is in great demand. Can you imagine mastering your chosen field, going to a job interview, and being told that you'll be paid with beer money because your work is so much fun? You'd probably be about as angry at that suggestion as I am.

I don't know about anyone else, but I regularly purchase music that I hear on my favourite internet radio station (SomaFM), specifically because I heard it there.

I don't live the US, so I can't contact a senator or representative. Instead, lately I've been making a point of contacting the artists themselves to let them know that I just bought their album and why.

i.e: 'Hey there you crazy cat - I discovered your music recently after hearing a song on SomaFM, so I bought the album. Did you know that the RIAA, an organization that is supposed to be representing you, is trying to kill off that promotional stream for you in the USA?'