Congressional momentum appears to be building in support of overturning a contentious ruling that Webcasters argue could cripple their services.
On Thursday, U.S. Sens. Ron Wyden (D-Ore.) and Sam Brownback (R-Kansas) introduced a bill that would repeal a U.S. Copyright Royalty Board decision scheduled to take effect July 15. The rules would raise the rate per song and per listener retroactively to 2006, and then in each year until 2010. It would also require each Internet radio "channel" to make a $500 minimum payment.
Opponents of the new rules, which include large and small commercial Internet radio companies, National Public Radio, and other public broadcasters, say the decision would lift the existing required rates by 300 to 1,200 percent, potentially putting some operators out of business. They have been lobbying Congress for relief, and some have indicated court challenges are also imminent.
SoundExchange, the non-profit entity that collects the fees on behalf of the record industry, has continually defended the changes as fair and necessary to provide adequate compensation to artists.
Called the Internet Radio Equality Act, the Senate measure is similar to a House of Representatives bill introduced in late April by Reps. Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.).
Like that bill, the Senate version would place Internet radio services on the same level as satellite radio services, which are currently required to pay royalties equivalent to 7.5 percent of their revenue. It also proposes a method for calculating royalties required of non-profit broadcasting entities like NPR, including limiting their required payments to no more than $5,000 per year--unlike the House bill, which calls for a report to Congress on public broadcaster obligations.
The senators said they feared that without congressional action, Internet radio--in particular, smaller Webcasters with limited revenue streams, Brownback said--will not be able to flourish.
"Keeping Internet radio alive is part of a broader issue that is important to me--keeping the e-commerce engine running by preventing discrimination against it," Wyden said in a statement.
The U.S. Copyright Royalty Board has pushed back the date on which a contentious fee hike for Internet radio broadcasters takes effect.
In a 32-page final rule (PDF) formally published Monday, the three-judge panel within the Library of Congress set July 15 as the date that the new royalty rates required of Net radio operators will kick in--two months later than the original deadline.
After more than a year of vetting outside submissions, the judges issued an initial ruling on March 2, drawing widespread outcry from large and small commercial Webcasters and the public radio community.
The board prescribed rate hikes of .08 cents per song per listener retroactive to 2006 and then 30 percent each year until 2010, when they would climb to .19 cents per song per listener. It also said each station would have to hand over a minimum $500 royalty payment.
SoundExchange, the non-profit entity that collects the fees and supported the hikes, has said the CRB's changes are necessary to compensate artists adequately.
A group called SaveNetRadio, whose members include Internet radio listeners, Webcasters and artists, says the decision will cripple the Internet radio medium if left untouched. It is supporting a new House of Representatives bill that would invalidate the board's decision in favor of setting a level rate for all digital music services, including satellite, cable and Internet radio and Internet-based jukeboxes.
The group said in a statement Tuesday that it would spend the next 45 days lobbying Congress to enact that bill. "We feel strongly that Congress could not possibly have intended a structure whereby Internet radio services pay 60% to 300% of their revenue in royalties," the group wrote.
The courts may also have a say in the debate, as the formal publication of the CRB decision in the Federal Register opened a 30-day period for notices of appeal. An National Public Radio representative said late Monday that the organization still intends to take such a step.
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