Webcasting September 5, 2007 Status Report

Before the Congress went on recess, some members stated their desire for progress in the negotiations between webcasters and SoundExchange concerning the rates and terms for webcasting sound recordings. “In a joint statement, Sens. Ron Wyden (D-Oregon) and Sam Brownback (R-Kansas) said they were “troubled by the lack of negotiating progress” and promised to take action to push the IREA bill forward if agreements are not made by Sept. 3. ” (See http://www.broadcastlawblog.com/archives/internet-radio-congress-to-return-will-internet-radio-royalties-be-on-its-agenda.html).   It appears that SoundExchange has done everything they could to spin “progress” and then some.

On 8-21-2007, SoundExchange sent an offer to some of the “small commercial webcasters (SCWs).  It appears that most of the SCWs are outright rejecting the offer.  The SCWs that participated in the arbitration process before the Copyright Royalty Judges (CRJs) are still in negotiations with SoundExchange, according to their attorney.  The large webcasters, represented by DiMA, have reached a settlement over one of the terms of the webcasting decision by the CRJs, who established a $500 minimum fee per channel or station, with out a cap on the number of stations.  For these large webcasters, some of who offer individualized channels, that would mean a huge increase in the amount of fees paid as there had been a cap in place.  The deal limits the minimum fee to $50,000 per service.  That means that DiMA members would need to only pay the $500 minimum fee for the first 100 channels/stations.  So what did SoundExchange get in return?  DiMA members will provide “census” reporting.  That means that they will report data about each an every song they webcast.  The current regulations only require data to be submitted for two weeks per calendar quarter.  Further, DiMA and SoundExchange have agreed to for a committee to explore the topic of stream ripping  and how technology might be developed to stop the practice.

It is important to note that the DiMA agreement only applies to SoundExchange members.  While SoundExchange collects and purportedly distrubutes royalties on behalf of all copyright owners and performers, it can only negotiate terms on behalf of those copyright owners and performers who are SoundExchange members.  It appears that both sides will ask Congress or the Copyright Royalty Judges to codify the settlement, as it is other wise likely a logistical problem for both sides.  In reading the DiMA and SoundExchange press releases on the settlement, DiMA claims this as an important first step in the negotiation process.  In contrast, SoundExchange makes no references to future negotiations.

Finally, it appears that the effort to add sound recording royalty burdens on traditional broadcasters is about to get a boost in the form of a new bill.  The RIAA has been pushing for these rights for decades and has always been rebuffed.  This will be watched closely.  It is interesting to note the timing of this renewed effort.  Almost immediately after the webcasters started shouting foul over the CRJ webcasting decision and raising the fact that traditional radio doesn’t pay these fees, unless they simulcast a webstream, SoundExchange and others raised the heat on their rhetoric that traditional broadcasters should be paying these fees.  Now that a labor day “deadline” for webcasting  negotations has come and gone, the push new broadcast fees will heat up, perhaps distracting from the fact that the offers and one settlement in the webcasting space is not the relief that most webcasting parties are seeking.  Coincidence? 

Here is a take on the current status of the issues.  As the blog points out, at this time there has been no announced progress in the webcasting arena for educational and other noncommercial webcasters, such as NPR and religous stations.