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RADIO STATIONS LOSE APPEAL OVER ONLINE MUSIC
Will Have to Pay Performance Royalties
If your only experience with courtroom drama comes from Law and Order and Matlock, prepare to have your reality crushed.

In a ruling released yesterday, the 3rd U.S. Circuit Court of Appeals upheld rulings by a lower court and the U.S. Copyright Office that radio stations must pay royalties to performers for online broadcasts. The Copyright Office established a rate of basically one cent per hour/per listener last year and the U.S. Librarian of Congress reduced that rate for many small, Internet-only webcasters.

Stations appealed the earlier rulings, arguing that they shouldn’t have to pay the internet fees because they aren’t paying the fees for terrestrial broadcasts. As you no doubt know, radio stations pay per-song royalties to songwriters, but not performers, record companies or anyone lucky enough to own the rights to a song. When Congress updated copyright laws in 1995 and 1998, it said that sound-recording owners should get paid for webcasts. Broadcasters argued unsuccessfully that Congress meant that distinction not for simulcasts online or internet-only webcasts, but for music services that allow users to pick songs and/or downloads. The three-judge panel disagreed. As three-judge panels often do.

The National Association of Broadcasters was less than happy with the ruling, issuing this terse statement: “NAB disagrees with the court opinion, which we believe serves to stifle efforts by hometown radio stations to better serve listeners. We will be exploring all of our legal and legislative options to overturn this decision, which we believe misinterprets the intent of Congress. And by hometown radio stations, we're obviously not talking about the fact that 10 companies generate two-thirds of industry revenue.”

The ever-upbeat RIAA was much more, uh, upbeat. Said President Cary Sherman, “We applaud the court's ruling, affirming our view of the law that artists and record companies should be fairly compensated for the use of their music on the Internet. It also extends our record in court cases not against 12-year-old girls to a perfect 18-0.”

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