"This decision will certainly reinforce the steadfast opposition of copyright owners to compulsory licensing."
—Cary Sherman, RIAA


Lower Rates for Net-Only Stations Don't Make Contentious Climate Any Friendlier
Welcome to the World Webcasting Wrestling Foundation. Watch out for flying chairs.

Agreeing with the Register of Copyrights, the Librarian of Congress has rejected the rate for Internet-only radio licenses submitted by the Copyright Arbitration Royalty Panel (CARP). The CARP had proposed .014 per performance for stations without an offline component.

The Librarian has instead decided to apply the panel’s proposed .07 cents performance fee for the online streams of over-the-air stations to both those entities and to Net-only stations.

That's too little, say rights holders. That's still too much, say Webcasters.

The Librarian also slightly reduced the ephemeral license fee—permitting stations to make copies of sound recordings to facilitate transmission—from the 9% of performance fees proposed by the CARP to 8.8%.

So-called "business establishment services" that provide background music fared less well in today’s ruling. Such entities will be exempt from performance fees, but must pony up 10% of gross proceeds, with a minimum payment bumped up to $10,000 from the $500 honorarium suggested by the CARP.

All other services, however, will pay a $500 license. So much for the details.

As to the response, well, nobody’s very happy.

The RIAA, which had endorsed the rates set by the Panel, objected strongly to the Librarian’s ruling.

"The import of this decision is that artists and record labels will subsidize the webcasting businesses of multi-billion dollar companies like Yahoo, AOL, RealNetworks and Viacom," insisted RIAA President Cary Sherman in a statement. "The rate, which cannot be squared with the decision of the arbitration panel, simply does not reflect the fair market value of the music as promised by the law. This decision will certainly reinforce the steadfast opposition of copyright owners to compulsory licensing."

Further fulmination came from John L. Simson, Executive Director of SoundExchange, the royalty-collection entity co-founded by the RIAA.

"Today's decision by the Librarian of Congress, which disregarded voluminous economic and business evidence supporting a significantly higher rate, means that once again artists and record companies will not receive fair value for their labors," reads Simson’s broadside. "There is a reason why we have the expression, 'I can get it for a song.' It is because we, as a culture, devalue artistic creation. This is just another example of that cultural discrimination.

"Recording artists and sound recording copyright owners should not be forced to subsidize the growth of webcasting as we've been forced to subsidize the radio industry for the past 70 years," Simson’s statement continues. "Fair and equitable royalties and nothing less should be paid when recordings are used to build these new businesses."

Similar concerns were articulated by execs at AFRTRA and the American Federation of Musicians (AFM). "We are pleased that recording artists will finally receive payment when their work is performed on the internet," averred AFTRA exec Greg Hessinger. "But we are concerned that the compensation they will receive
will be substantially less than the value that their work brings to these corporations." Added AFM Prexy Thomas F. Lee, "We are concerned that the rate set by the Librarian is too low to result in fair compensation to artists that will help them to survive financially and to continue creating."

Politicians, too, jumped into the fray. Rep. John Conyers (D-MI), one of the most vocal advocates of artists' rights in the Congress, expressed his disappointment in ringing tones.

"I am deeply troubled by the Librarian of Congress’s decision, which only short changes artists and the value of the music they create and we enjoy," Conyers complained. "The decision to apparently throw out the royalty rates for Internet radio developed by an independent group of arbitrators thumbs its nose at the judicial process that Congress put in place. This decision runs counter to the intent ofCongress, which was to ensure that artists and record companies would be fairly compensated for the use of their creative works by a growing Internet radio industry."

With this kind of reaction from copyright holders and their champions, you’d think Webcasters might be a bit happier, yes?

No. Check out the following fusillade, posted on the site of streaming netco SomaFM:

"To say the results are disappointing is an understatement. While the rates were effectively cut in half, that still means that to stay on the air, SomaFM will have to pay about $500 a day in fees to the RIAA or over $15,000 a month. Just to expose you to new music that you wouldn't hear anywhere else. Just to help you buy more records. Do they just not get it, or is the RIAA just greedy?"

The angry missive goes to assert that even with rates cut in half, the cost of licenses will drive most independent Webcasters out of business.

Indeed, the online journal Media Unspun, surveying the mountain of coverage of the story, pointed out that "every Webcaster... quoted this morning claimed this was a death sentence."

Expect much more carping in the future.