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Internet Radio Equality Act

If you have been following the saga of Internet Radio (webcasting/streaming audio, etc.), you already know about the Internet Radio Equality Act (HR 2060) , which was introduced into the House. It is briefly covered in a previous blog entry. As noted in that entry, I had some reservations about the portion concerning non-profits and in particular Educational Stations that are student operated (College Radio).

For various reasons, which I won’t detail, I didn’t offer more on the topic, except to say that I knew there was a Senate version of the bill soon to be introduced. A week ago Thursday the Senate version of the Internet Radio Equality Act (S 1353).

Both bills have the potential for being very positive for College Radio. They both change the rate setting standard that the Copyright Royalty Board (CRB) must use when setting rates. The current rate setting standard for sound recordings, as used by webcasters is a “willing buyer/willing seller” standard. This is in contrast with the standard used for musical works, which is a test of being “reasonable”. Without delving into the details, the difference is that the “reasonable” standard makes rates accessible to the user and offers a “reasonable” profit margin to the copyright owners, whereas, the willing buyer/willing seller standard compels the CRB to set a higher rate. So, the bottom line for College Radio is that both bills offer this same change.

Similarly, both bills would nullify the rate determination of the CRB. This creates a new problem. The rates for webcasters have already expired. The CRB rate determination (and law) acknowledged that fact and since the CRB rate determination was higher than the old rates, webcasters, according the CRB decision are not only facing new and higher rates going forward, but they, for the most part owe additional money back to when the previous rates expired, even though those webcasters already paid under the old rates. If the CRB decision is nullified, as proposed by both bills, then there must be a rate set for webcasters until new rates can be set under the proposed new standard.

The bills both propose the same rates for commercial webcasters (and broadcast simulcasters) during the interim (I won’t detail those rates here, but they are different from previous rates). For non-commercial stations (including religous, community, NPR and College), the House version proposes a 50% increase over the 2004 rates. For some non-commercial entities, this is not a problem due to the funding sources and the amount of the fees in 2004. To be specific, NPR stations had their fees paid under an agreement with NPR/CPB and the RIAA. The bottom line is that these stations (rather CPB) paid roughly $100 per year. An increase to $150 is not exceptional and apparently not problematic, particularly given the $500 minimum required under the CRB determination and the associated listening cap. For others, this increase, as proposed, could mean a rise from $500 to $750. This increase would be a much larger dollar amount from stations that don’t have their fee paid for them and have the smallest budgets.

The Senate version of the bill handles non-commercials a bit differently. The college stations AND others who participated in the SWSA would pay the same rates they previously paid until new rates are set under the proposed “new” standard. All other non-commercial stations, such as NPR, would see a 5% increase. While this does nothing to change the inequality between NPR/CPB stations and College stations, it does preserve the status quo until new rates can be set and it is much better than the house version for all non-commercial stations.

There had been an effort to include the same SWSA recordkeeping requirements in the Senate version of the IREA, but that language did not make it into the bill, as introduced.

This is what I suggest.

Both bills offer a potential long term benefit. The Senate version of the bill offers this benefit without ANY changes that would cause either the college stations, other non-commercial stations, copyright owners or artists to suffer any measurable loss of income or additional expenses. IF both bills pass, a committee would meet to try to iron out the differences between the bills and I am confident that non-commercials would benefit greatly from the outcome. Therefore, it makes a TON of sense to support both bills.

How? It’s relatively easy and definitely painless. Visit the SOS page or the Save Net Radio page and follow the instructions for calling your representatives. This takes all of 3-5 minutes! Call both your representatives and Senators! Be sure to tell them that you are supporting the Internet Radio Equality Act on behalf of College Radio and that if there are hearings, you want to see College Broadcasters present and that they deserve relief from the recordkeeping requirements.

May 18, 2007 Posted by | Rates, Recordkeeping, Webcasting | 1 Comment

“Final” CRB Rates Issued

As required  a “final” result of the CRB rate setting process was issued today in the CRB Final Determination.  There were no surprises.  In short, the CRB issued their determination following a LENGTHY and costly hearing process which highly favored the record labels who will receive 50% of the net proceeds and the artists who will receive the balance in a manner prescribed by Congress, provided they didn’t sign those rights away.

That determination was subject to petitions for a rehearing.  Numerous parties to the hearing petitioned the CRB for either a rehearing or a clarification of its determination.   The CRB decided to address or perhaps clarify two portions of the petitions.  The CRB decision  concerning the petitions is available here.  This offered nothing significant to most Educational Stations.   We will continue with a discussion of what happens next, but for those interested, the CRB explanation of changes from its determination and final determination will be posted at the bottom of this entry.

The options available to webcasters and participants are fairly clear, although time table is a little vague and subject to interpretation.

Under the statute, the only recourse is to appeal the decision of the CRB to the courts.  The burden required to overturn the CRB decision is rather high by legal standards.

There is another option available.  That option is to convince Congress that the outcome of the CRB decision was flawed by due to the fact that the statute they used to determine rates should be changed.  In other words, the CRB was required to set rates under a “willing buyer/willing seller” standard.  This standard needs to be changed to a “reasonable” rate in order to accommodate the various types of webcasters. This is to say that a willing buyer/willing seller standard inheritently predisposes the CRB to set the rate a the highest possible rate that they could sell the rights, and does not require them to consider the smaller or noncommercial stations.

Along these lines, a bill has been introduced in the U.S. House of Representatives to address this issue and to address the commercial rates in the form of the Internet Radio Equality Act (H.R. 2060).   

The next post to the blog will contain details about  H.R. 2060 and how you can support that initiative, if you so choose.

Will R

 On March 2, 2007, the Copyright Royalty Judges issued the initial Determination of
Rates and Terms. Pursuant to 17 U.S.C. 803(c)(2) and 37 CFR Part 353, the parties filed
Motions for Rehearing. The Judges requested the parties to respond to the motions filed, in
order to know the positions of each party on each of the issues raised in the motions, and ordered
the parties to file written arguments in support of each motion. The parties filed responses and
written arguments. Having reviewed all motions, written arguments and responses, the Judges
denied all the motions for rehearing. Order Denying Motions for Rehearing, In the Matter of
Digital Performance Right in Sound Recordings and Ephemeral Recordings, Docket No. 2005-1
CRB DTRA (April 16,2007). As reviewed in the said Order, none of the grounds in the motions
presented the type of exceptional case where the Determination is not supported by the evidence,
is erroneous, is contrary to legal requirements, or justifies the introduction of new evidence.
17 U.S.C. 803(c)(2)(A); 37 CFR 353.1 and 353.2. The motions did not meet the required
standards set by statute, by regulation and by case law. Nevertheless, the Judges were persuaded
to clarify two issues raised by the parties. This Final Determination includes a transition phase
for 2006 and 2007 to use Aggregate Tuning Hours (“ATH”) to estimate usage as permitted under
the prior fee regime. This limited use of an ATH calculation option should facilitate a smooth
transition to the fee structure adopted in this Final Determination. Next, the regulations are
corrected to refer to “digital audio transmissions” in place of the phrase “Internet transmissions.”

First, they seemed to agree that the requirement to report “per performance” date (i.e. number of listeners to each song regardless of duration of listening) was, perhaps a problem in the short term and granted a reprieve to webcasters.  This took shape in the ability to use ATH, a FAR simpler metric, in 2006 and 2007 before switching to a requirement to per performance metric in 2008.  It is the position of CBI, and perhaps others, that while this data can be produced, it is highly cost-inefficient and further, highly unreliable due to the inherent technical nature of streaming.  The sole reason for SoundExchange to request this level of data is to provide “accurate” means of distributing royal, but the data they will receive is, at best, a proxy for accurate data at an unreasonable cost to the webcaster.

Second, SoundExchange asked the CRB to clarify the definition of use.  In other words, the statute refers only to sound recordings that are digitally transmitted, but exempts certain uses, such as broadcast.  The CRB determination used the term “Internet transmission”

May 2, 2007 Posted by | Rates, Recordkeeping, Reports of Use, Webcasting | Leave a comment