Webcasting Rate Set at .07¢ Across the Board
The debate over the appropriate royalty rates webcasters should pay for streaming music just got a little more interesting. Librarian of Congress James H. Billington today announced his decision with regard to the rates and terms for webcasting and ephemeral recordings, setting a .07¢ performance fee (per performance) for “Internet-only” transmission and “radio retransmission” and 8.8 percent of the performance fee will be due for the making of ephemeral recordings that facilitate the transmission of sound recordings on the Web. The rate for “Internet-only” webcasters is half what CARP proposed, but intial reactions from webcasters indicate that this is still a greater financial burden then they are prepared to handle.
In summary, according to the Library of Congress site:
The most significant difference between the CARP’s determination and the Librarian’s decision is that the Librarian has abandoned the CARP’s two-tiered rate structure of 0.14¢ per performance for “internet-only” transmissions and 0.07¢ for each retransmission of a performance in an AM/FM radio broadcast, and has decided that the rate of 0.07¢ will apply to both types of transmission. Some of the rates for noncommercial broadcasters have also been decreased, and the fee webcasters and broadcasters must pay for the making of ephemeral recordings has been reduced from 9 percent of the performance fees to 8.8 percent. The minimum payment for business establishment services was increased to $10,000.
A complete rate schedule and detailed explanation of this complicated issue is available at http://www.copyright.gov/carp/webcasting_rates_final.html.
The summary statement issued by the LOC clarifies that the librarian may substitute his own judgment for that of the CARP, but he is required to “give deference to those aspects of the CARP’s determination which were not arbitrary or contrary to law.” In this instance, he “accepted the CARP’s conclusion that the RIAA/Yahoo! agreement represented the best evidence of what rates would have been negotiated in the marketplace between a willing buyer and a willing seller for a license to engage in webcasting of radio retransmissions and Internet-only transmissions.” However the librarian found that there was “no basis for concluding that radio retransmissions provide a promotional value that Internet-only transmissions do not provide” and so rejected the original two-tiered royalty structure recommended by the CARP.
Billington was charged with setting the rate after he elected to reject the suggested fee schedule proposed by the Copyright Arbitration Royalty Panel on May 21, 2002. By law his decision was due today.
A brief history of events to date: CARP issued a report on February 20, 2002 recommending a fee structure that was less than requested by the recording industry but significantly higher than what webcasters felt they could handle. Billington then had until May 21 to accept or reject CARP‘s recommended webcasting royalty rates. He rejected the suggested rates but gave no indication as to why. Legal statutes then gave him 30 days to set the rates, which brings us to today’s announcement.
Meanwhile, the debate has been active both within the industry and on Capitol Hill. Hundreds of Internet radio stations and channels across America shut off their music streams on Wednesday, May 1st as part of an organized protest meant to draw attention to their concerns. Meanwhile, organizations such as SoundExchange, the unincorporated division of the RIAA established to collect performance royalties in the digital world, advocated in support of the proposed rates and argued for adequate protection of the rights of musicians and copyright owners.