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February 24, 2007 Posted by | Uncategorized | Leave a comment

Webcasting Issues

Last Friday (3/2/07) the Copyright Royalty Judges (aka Copyright Royalty Board or CRB) issued a determination of webcasting rates for 2006-2010. The determination is a lengthy document. The outcome is summarized in the adopted regulations.

In sum, the outcome for College Broadcasters is a “new” minimum fee is $500 per year though 12/31/2010. The fee is retroactive to 1/1/2006. For almost all stations at a school with an enrollment of under 10,000 students, this is an increase of $250 per year. It also means that stations will likely owe an additional $500 to SoundExchange, the company that collects the fees and then distributes them to the record labels and artists after their costs of doing business (including litigation) are paid. Conversely, if a station paid $500 in 2006 and 2007, they owe no additional fees if the operated only one channel.

It is important to note that the fee is a minimum fee per channel/station. If the station exceeds 159,140 ATH (i.e. the station averages 218 concurrent listeners) in any month, the station is liable for additional royalties. The other half of this is the fee is per channel/station. This does not mean that your station needs to pay additional fees if it streams in different formats such as Real Audio, Windows Media, QuickTime, MP3, etc. It does mean that if your station offers different music programming on different feeds (“side channels”) that it will need to pay the minimum fee for each such feed.

Is this outcome a victory or a loss?

It depends on how you measure success.

So how did Educational Stations fare? Unfortunately, that again depends on a number of factors. Below is a brief summary, followed by a more in depth look at the history of rates.

Leaving the SWSA settlement (see below) aside, the assessment of outcome is positive.

The 2002 minimum was $500 with a cap of ~20 average concurrent listeners before additional royalty fees. Internet only stations had a cap of under 3 listeners.

The 2006 minimum is $500 with a cap of 218 average concurrent listeners before additional royalty fees. Internet only stations are included in this rate.

When compared to the SWSA settlement, the “victory” is less convincing.

Under the SWSA settlement the royalty fee was $250 or $500 depending on enrollment at the school with a cap of 200 average concurrent listeners. The loss here is that the fee went up for most stations and in some circumstances stations with side channels will need to pay additional fees. The “gain” is that the cap increased from 200 to 218 average concurrent listeners, but that is little consolation.

Before we look at the history, lets examine the question of if these rates will stand.

Parties to the rate determination process can petition the CRB for a rehearing within 15 days of the release of the decision , which is March 19, 2007. I expect that several parties will petition the CRB and that those petitions will be denied. If that is the case the parties may appeal the decision to the US Court of Appeals for DC. Even if this happens, the court must find that the decision was arbitrary and capricious – which means that when presented with the facts, no there was no reasonable way for the decision to turn out the way it did. This is a very high standard. The most likely avenue for redress is an act of Congress. While on the surface this may seem desirable, there are some real potential problems with such an action, which I will cover in another post.

Let’s take a quick look at the history.

On February 20, 2002, the Copyright Arbitration Royalty Panel (“CARP”) issued the first webcasting rate determination (Webcaster I). As this link shows, the rates for licensed Educational stations were set at $0.0002 per song per listener for the retransmission of the broadcast plus 9% for ephemeral fees (fees for making copies to webcast), with a $500 minimum fee. Using rough math, that means if a station exceeded 20 average concurrent listeners, it would be liable for additional royalties. The first two side channels would have been 2.5 times the cost and each additional side channel would have been 7x the cost. It is important to note that this determination did not offer these rates to unlicensed Educational Stations. Those stations would have had to pay 7x the amount of the licensed Educational Station, with an effective listener cap of 3 before additional royalties would be due. The laws in effect at that time provided the Librarian of Congress an opportunity to review and reject the CARP decision, which he did in his June 20, 2002 determination.

Appendix A of the Librarian’s determination shows the rates. The minimum fee remained and the rate did not change for Educational stations, but the costs for side channels and ephemeral fees decreased. Internet ony Educational Stations were still subjected to the commercial webcaster rate. While the commercial rate was reduced it was still 3.5x the noncommercial rate.

Due to immense pressure, the US Congress passed the Small Webcasters Settlement Act of 2002, which allowed certain small commercial webcasters and non-CPB, non-commercial webcasters to negotiate separate agreements. As a result, non-CPB funded webcasters reached a negotiated settlement in May of 2003. The outcome resulted in reduced rates for many stations and the elimination of a requirement to produce reports of use, in exchange for a “data fee”. In short, an Educational Station at an institution with an enrollment of under 10,000 and with only one channel paid $250 (for up to 200 average concurrent listeners), plus the data data fee. Retroactive fees were lower. Stations at larger schools paid $500 with the same listener cap. Any school could stream up to three channels for the $500 minimum fee, provided the listener cap was not exceeded.

The negotiated settlement expired as of 12/31/2004. In the mean time, Congress passed a law (the CRDRA) which was designed to change the rate setting process in a way to prevent the problems that associated with the CARP process (including the lowering of costs for participants in rate determination process) and the determination of the Librarian of Congress. The law had several effects. First, it created the CRB as a federally funded board to handle royalty issues. This is important, because the CARP and associated costs were passed along to the participants in the rate determination. The CRB costs were not passed along to the participants, which opened the door to new participants in the rate determination process. The CRDRA also extended the 2004 rates and terms through 2005 and temporarily extended the terms of prior rates and terms through the new rate setting process. In other words, that means that stations needed to continue to pay the “old” rates until new rates were determined. If the rates went up, stations would owe additional fees. If rates went down, stations were due a refund.

There is a lot of history to this decision and related issues, including recordkeeping/reports of use, the Sound Recording Performance Compliment and display requirements.It is my intention to populate this site with all of the required information for stations to make intelligent decisions concerning their future as webcasters. While we may touch upon related issues in the discussion, the primary focus will be on webcasting and the student operated stations.

While I am intimately familiar with many aspects of webcasting and “college radio”, I am new to blogging, so I hope that you will indulge me as I work with a means of communication.

Here are some basics to get things started.

Webcasting is, for some stations, their only means of reaching beyond the campus. For others this is the only means of reaching ANY audience. For a lot of stations, webcasting is an important addition to their existing operations as it means that they can further their mission of exposing new artists or under exposed artists.

For some stations, the question is how do we start? For many stations, the question is how do we become/continue to be legal? For another segment, the question is, do we continue webcasting, cease webcasting based upon the requirements or change internal operations?

This discussion is not meant to tell you how to proceed, rather to inform you of the facts and to allow you to make your own decisions. If there is a strong sentiment that warrants a means to cause change, those means will be explored and presented.

Will R

February 24, 2007 Posted by | Rates, Webcasting | 1 Comment