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“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”

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May 2, 2007 - Posted by | Rates, Recordkeeping, Reports of Use, Webcasting

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