Internet radio stations get a breather

Stephen Withers
Friday, 04 May 2007 04:18

Your IT - Home IT

The publication of the US Copyright Royalty Board's rule on digital performance rights on May 1 means webcasters have until July 15 to get the law changed before the first payments are due under the new regime.

The Internet Radio Equality Act proposed in Congress would give webcasters the option of paying either 7.5 percent of revenues or a flat rate of 33 cents per hour per listener. This proposal is gaining support among members of the House of Representatives, and a similar bill is expected in the Senate.

From the perspective of a small webcaster, that sounds more palatable than the Copyright Royalty Board's determination of $US0.0008 per performance for 2006 (rising to $US0.0019 in 2010), as it ensures that royalties cannot exceed revenue.

Although these numbers seem small, a "performance" means the streaming of one song to one listener. The retrospective nature of the change would also cause problems for some webcasters.

"We feel strongly that Congress could not possibly have intended a structure whereby Internet radio services pay 60 percent to 300 percent of their revenue in recording royalties, while satellite radio pays 5-7 percent and broadcasters pay zero," said advocacy group SaveNetRadio.

The Copyright Royalty Board explains that it is required to determine "the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller", and "the degree to which use of the service may substitute for or may promote the purchase of phonorecords by consumers." This suggests the Board considers traditional broadcasters as promoting sales, but webcasting as a substitute for buying music (possibly because of the ease with which tracks can be captured for later use).

It isn't as though the board didn't consider revenue-based royalties - they were rejected on the grounds that revenue is a poor and unnecessary substitute for actual usage, and determining a proper allocation of revenues is complex: "The Copyright Royalty Judges do not find a sufficient clarity of evidence based on the record in this proceeding to produce a revenue-based metric that can serve as a good proxy for a usage-based metric."

And spare a thought for the rights owners: just because some webcasters can't bring enough money to pay the determined rates, should they receive a lower rate from all webcasters?