Net radio bill blasted by royalty collectors
A congressional push to overturn controversial increases in fees for Internet radio operators came under attack on Friday by SoundExchange, the organization that collects royalty payments on behalf of musicians.
SoundExchange has been among the chief forces that successfully persuaded the U.S. Copyright Royalty Board to elevate the fees required of Webcasters over the next few years by anywhere from 300 to 1200 percent, according to the rules' opponents. The CRB this month has already declined to reconsider most of its March 2 decision after reviewing petitions submitted by National Public Radio, Clear Channel Communications, groups representing smaller commercial Webcasters and others.
But a bill introduced on Thursday by Reps. Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.) would invalidate that ruling and instead require all Internet, satellite and cable radio operators, along with Internet-based jukeboxes and other similar services, to pay 7.5 percent of their revenue "directly related to" transmission of sound recordings.
In a press release on Friday (PDF), SoundExchange attacked the bill as a blow to the "fair market rates" set by the CRB. The group claimed the bill would require musicians to pay back more than $50 million to "mega-corporate Webcasters" like AOL, Yahoo, Microsoft and Clear Channel because of retroactive language in the bill.
An Inslee aide told CNET News.com that he was puzzled by that number and suggested the group may have misread the bill.
SoundExchange also said there was no reason to believe that the CRB's new rules are unfair, despite claims from Webcasters that the changes will drive them out of business. Despite a growth in Internet radio services over the years, musicians each only collected an average of $360 from Webcasting in 2006, and small Webcasters only accounted for about 2 percent of all royalty payments during that time, the organization said.
SoundExchange has already been trying on its own to make peace with opponents of the new rates. It issued a statement last week announcing it was "reaching out to Webcasters" in hopes of "reaching mutually beneficial arrangements" designed to ensure Internet radio continues to grow and artists are fairly compensated.
My rates increased 3000% with the decision of March 2nd, so this blanket statement by SoundExchange is false and misleading.
"the proposed bill presents no factual or economic basis for rejecting the reasoned recision of the CRB"
Also untrue. The proposed bill simply corrects the guidelines the CRB was forced to use in the latest decision. It is ludicrous for SoundExchange to suggest that the objections are by a "disgruntled minority" as they claimed just a few weeks ago. Equally rediculous is the notion that the rates for performance of a sound recording should be based on the transport mechanism used to deliver that performance to the listener. Internet radio pays one rate. Satellite another. And HD radio pays nothing. Yet all deliver digital audio to the listener. I have yet to see any rational justification for this from SoundExchange.
The CRB, moving forward, will be required to consider the same factors they are required to consider when determining rates for Satellite radio, which include these objectives:
(A) To maximize the availability of creative works to the public;
(B) To afford the copyright owner a fair return for his creative work and the copyright user a fair income under existing economic conditions;
(C) To reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication;
(D) To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.
(From from 801(b)(1) of the US Copyright Act)
If the CRB had been given those objectives to begin with, I am convinced that the rates would be different. The reason the CRB was not given those objectives was due to successful lobbying by the RIAA a few years ago. It is time for SoundExchange and the music industry to embrace the digital age, and webcasters who are helping give valuable exposure to lesser-known artists.