Webcasting Royalty Rate Debate Heats Up



With only 26 days left to go, the debate over webcasting royalty rates is heating up on both sides. The Librarian of Congress, James Billington, has until May 21 to accept or reject CARP‘s recommended webcasting royalty rates (see NewMusicBox’s earlier CARP coverage). Webcasters greeted the initial CARP recommendations with charges that the rates would drive them from the business. Recording industry executives, et al., stood behind the recommendations though the rates were lower than they had requested. Both sides are formally appealing the decision.

In just the past few days, public attention has been attracted to the story by several events. Twenty members of congress have signed a letter to Billington expressing concern that the CARP proposal “is contrary both to the intent of the DMCA and Congress‘s general policy not to stifle innovation on the Internet.” The letter goes on to explain that the congressmen “want to ensure that all creators are fairly compensated for their work. We are concerned that the CARP recommended rates for all sound recording copyright owners are, however, high in comparison to historical royalty rates,” rates that seemingly might “undermine entirely the ability of small webcasters to survive. In our view, if the royalty rates or formula stifle an inchoate industry and force hundreds of small webcasters out of business, Congress’s goals would not have been met.”

On the other side of the fence, SoundExchange, the unincorporated division of the RIAA established to collect performance royalties in the digital world, purchased the inside cover of the industry magazine Billboard to publish an open letter in support of the proposed rates and urging protection of the rights of musicians and copyright owners. Though webcasters and simulcasters “are inundating Congress with complaints that they cannot afford to pay for the music—even though they pay market value for things like bandwidth and rent,” the letter points out that “musicians, vocalists and sound recording copyright owners deserve to be fairly compensated for their creations. Webcasters and simulcasters are not entitled to a free ride or a subsidy.” The SoundExchange Web site includes a sophisticated page for sending letters to congress members in support of the royalty rates.

RAIN (the Radio and Internet Newsletter) has responded to the controversy by proposing a “Day of Silence” on May 1 to demonstrate the potentially paralyzing effect the rates would have on the industry and to encourage listeners to write their members of congress before webcasters are forced into bankruptcy. According to RAIN, the list of participants currently includes AllDanzRadio (various formats), Beethoven.com (classical), Choice Radio (various formats), ChronixRadio (rock), ClevelandHits.com (CHR), CyberRadio2000 (various formats), Digitally Imported (various forms of electronica), HardRadio (rock), iNetProgramming (bluegrass and other formats), Internet Radio Hawai’i (Hawaiian music), KING-FM/Seattle (classical), KPIG/Freedom, CA (Americana), M4Radio (indie rock), Mostly Classical (classical), Radio Paradise (AAA), Radioio (AAA) and RAIN Radio (several formats).

Kurt Hanson, writing for Saveinternetradio.org, acknowledges that if the Copyright Office accepts the CARP’s recommendation, concerned parties could still petition Congress for a change in the DMCA. “However, by the time that could be accomplished, most of today’s pioneering Webcasters would be out of business,” he says.