FIRST SHOTS FIRED IN
WEB ROYALTY WAR
But when the action got underway Tuesday (7/31), the excitement of battle was felt throughout our nation, as concerned music industry parties pledged allegiance to their respective litigants and both sides were galvanized into action.
Maybe that’s overstating the drama just a bit, but the proceedings were not as boring as they could have been. Way more exciting than the "Work for Hire" hearings, anyway.
Discussions before the Copyright Arbitration Royalty Panel are being held in Washington to determine the royalty rate for recordings streamed over the Internet. The webcasters and the labels are both trying to persuade the panel to set a rate for streamed music that is favorable to their industries. Not surprisingly, the two sides differ on what that rate should be. The RIAA has already said it was perfectly reasonable in proposing that webcasters pay 15 cents an hour, or .014 cents per song, for music streamed (hitsdailydouble.com, 7/31).
In the second day of testimony Tuesday, lawyers repping the webcasters tried their best to make the record labels look like an organized gang out to secure their turf at any cost, claiming the license rate laid out by the RIAA is far too high and will cripple Internet ventures.
Attorneys questioned RIAA President/CEO Hilary Rosen and Senior Executive VP/General Counsel Cary Sherman about the industry's motives seeking compulsory licenses from webcasters given that traditional broadcasters have received a free ride because of the presumed promotional value of radio airplay.
Rosen countered that she was irritated by "webcasters constant presumption that they're in business to do us a favor," adding, "there is a new license and new rules."
The proceeding is expected to take months as the arbitrators try to determine what royalty rate is right.
Further confusing matters is the overlapping concerns created by recent mega-mergers between online and music companies. For instance, AOL Time Warner is challenging the RIAA’s proposed royalty rate in support of its Spinner.com service, but the company’s Warner Music Group is a member of the RIAA.
Forthcoming testimony from AOLTW execs, including Warner Bros. Records Exec VP David Altschul and WMG Exec VP Paul Vidich, is expected to be a highlight, but will most-probably confuse matters further.
