Posts Tagged ‘Copyright Royalty Board’

Roundup: The Performance Rights Act

June 16, 2010

The Performance Rights Act (PRA) has been a frequent topic here on the Radio 2020 blog ever since its inception, and with good reason. The legislation as it stands could have massive negative repercussions for the radio industry at all levels. Among other things, the new royalty structure will almost certainly result in the labels revisiting their contracts with artists if it passes — not something many have considered. This is only one of many ramifications that will rear their ugly heads if the PRA gets passed.

Let’s take a quick trip in a time machine and revisit my prior postings on the subject. For the benefit of our readers, here is a nice array of data on the subject. These posts range from October 2009 to the present and are presented oldest to newest in this list.

The Performance Rights Act is a very serious issue and it could still go one way or the other, so please educate yourself on the subject. Make an informed decision and let your Representative know your views!

Image: D. Reichardt / CC 2.0


Thank You, Ben Nelson!

May 3, 2010

Washington, D.C., is not a very straightforward place. Legislation is the result of deals, compromises, lobbyist influence, and many other factors. These find their way into law in the most roundabout ways at times. One standard approach is to take some piece of legislation — in this case the odious Performance Rights Act (PRA) — and attach it to some “must pass” measure up for vote. That way, its native popularity level has nothing to do with it being enacted. It happens all the time.

Enter Ben Nelson (D- NE), who chairs the Legislative Subcommittee, which oversees the Copyright Royalty Board (CRB). The CRB is the organization that would administrate PRA if it gets passed. The excellent thing is that he is on our side of the fight.

As RadioBusinessReport notes, he made mention of the PRA in a recent address about the CRB’s budget for 2011:

“As a brief aside, I continue to hear from a number of organizations concerned about the performance royalties bill that would affect local radio stations,” said Nelson. “I make this brief note here only because of the Copyright Royalty Board’s potential role under this legislation. Along with many of my colleagues I continue to oppose this bill and would not support an attempt to attach such legislation to an appropriations bill whether it is this one or any of the others.”

This is a step in the right direction!  Having someone in the right position to prevent the classic political sleight of hand is something that I find reassuring. Having grown up in  family of lawyers, I have seen all to well the winding path taken by even the most innocuous legislation.

Support for the Local Radio Freedom Act, which opposes the proposed royalty structures, is one of the only true bipartisan efforts on Capitol Hill, or at least in the House of Representatives. Too many remain off the record in the Senate to have a clear idea of where things stand with them. Nelson’s stance in keeping that back door shut will hopefully make the ongoing battle in the Senate a more straightforward and honest one.

Image: Senate portrait / Public Domain

Copyright Royalty Board Challenged as Unconstitutional

September 3, 2009

constitutionThe Copyright Royalty Board is a three-member panel that sets the rates paid for statutory copyright licenses. In other words, they determine how much a webcaster or radio station has to pay in royalties if they play a band’s music.

Now, I’ve had a number of comments from webcasters on my posts about the Performance Rights Act stating that they see no reason why broadcast radio should not have t pay the royalties that they do. In my opinion, that is a reversal of the horse and cart. Online royalties were ushered in despite the fact that broadcast had set the precedent of a value for value exchange (airplay promotion in exchange for broadcasting rights).  Then the push began using online audiocasting as the precedent to apply these royalties to their predecessors in the AM/FM world.

Well, despite the artificial divide that has been created between the two, there is common cause for a bit of optimism. On August 31, Live365 filed a complaint against the Copyright Royalty Board (CRB) in the U.S. District Court in Washington, D.C., stating that the CRB violates the Constitution’s appointments clause.

The basic argument is that due to the power held by the three-member board, its members should be considered “Principal Officers of the United States”. That definition make the positions Presidential appointees whereas at present they are appointed by the Librarian of Congress.

BLT: The Bog of the Legal Times provided a great quote from Judge Brett Kavanaugh of the U.S. Court of Appeals for the D.C. Circuit, who wrote on July 7 that the CRB might well run into appointment clause issues due to the way in which its membership is selected.

Nonetheless, in a concurring opinion, Kavanaugh opined that the manner in which the board is selected “raises a serious constitutional issue.” He wrote, “[B]illions of dollars and the fates of entire industries can ride on the Copyright Royalty Board’s decisions.” He compared its power to that of the Securities and Exchange Commission and the Federal Energy Regulatory Commission. “But unlike the members of those similarly powerful agencies, since 2004 Copyright Royalty Board members have not been nominated by the President and confirmed by the Senate.”

This is not an issue that is isolated to one group based on how they broadcast; it is an issue of vast importance to all of us. Judge Kavanaugh is right in his analyses of the far reaching implications for our industries. We have already seen the start of this impact in the CRB’s relationship with webcasters.

It would behoove all of us to pay attention to this case as its ramifications will ripple through the radio industry rapidly once a verdict is reached.

Image: caveman_92223 / CC BY-ND 2.0

Royalties and the Internet: The Conflict Continues

June 6, 2008

There are many flavors of radio out there ranging from broadcast to digital to purely Internet-based. Without too much work, you can find many of the same songs on each. What makes things interesting is the uneven way that royalty fees are dealt with across these various delivery mechanisms. Jim Puzzanghera over at The Los Angeles Times brings us both some news and some background on this highly divisive issue:

Joe Kennedy, chief executive of Pandora, carries a weapon in his battle over Internet radio royalty rates that he says could kill his popular online music site: a Stiletto.

Not the old-fashioned, sharpened-steel knife popular with mobsters and dancing street gangs in “West Side Story.” This is the high-tech Stiletto 100 Portable Satellite Radio from Sirius. Kennedy brandishes it when he meets with members of Congress to highlight what he calls the inequity of the royalty rates.

The Stiletto has two antennas. One picks up Sirius’ satellite signal and the other connects via Wi-Fi. But songs played over those connections pay different performance royalty rates.

“It’s the same station, the same songs,” Kennedy told me, holding the sleek white-and-black radio as he snacked on a Mediterranean wrap in the cafeteria of a Congressional office building. “It’s absolutely absurd.”

It does seem rather counterintuitive, and on first glance, might not seem like much to worry over. A few percent of a penny here and there cannot amount to much, can it? Multiply that by the number of listeners available online and it suddenly spirals into the stratosphere becoming million of dollars.

Sound Exchange, the company that is responsible for collection and distribution on digital performance royalties, has been battling with webcasting stations for well over a year now. Many of the smaller operations such as local public radio stations simply cannot afford to stream if the Sound Exchange sponsored version of the royalty rates becomes final.

When most of the world last tuned into the issue nearly a year ago, webcasters and SoundExchange were at odds over new performance royalty rates. Earlier in 2007, a special panel of federal judges called the Copyright Royalty Board significantly hiked the royalty rates. The board eliminated a provision that allowed small webcasters to pay 10% to 12% of their revenue instead of a flat per-song fee for each listener. And the judges ruled that the those fees should gradually increase, more than doubling by 2010 to .19 of a cent.

Pandora and many other webcasters screamed bloody murder. Those fractions of a penny might not sound like much. But they’re multiplied by the number of listeners for any given song and…

… can add up to millions of dollars a year. Webcasters complained their royalty payments would exceed their actual revenues.

Some small webcasters shut down before the new rates kicked in on July 15. Others went to federal court to try to overturn the new rates. That appeal is pending.

Sound Exchange executive director John Simpson reportedly compared the cries of outrage from the webmaster to “the boy who cried wolf,” claiming that the “on the ground reality” is that “strong business models can easily overcome the burden of the fees. In the meantime both purely streaming operations like Pandora and broadcast stations that stream their signal are watching with apprehension. To many in the industry, Sound Exchange seems to be characterized as the wolf at the door.

SaveNetRadio, a coalition of webcasters, listeners, artists and record labels opposed to the royalty rates, jabbed back today, saying the new rates were having a “devastating effect” on Internet radio.

At Oakland-based Pandora, which has 13 million registered users on its free, ad-supported site, the tab for 2008 would be $18 million under the new rates, Kennedy said. That’s most of the company’s projected $25 million in revenue.

“It’s taking 70%-plus of our revenues,” Kennedy said. Pandora is paying SoundExchange the old rate, which amounts to $10 million for 2008, but he doesn’t know how long that can continue.

He noted that the Copyright Royalty Board last year set new rates for satellite radio that started at 6% of revenue in 2007 and rise to 8% by 2012. And old-fashioned, over-the-air radio stations don’t pay performance royalties at all.

No matter which side of the fracas you find yourself on, it is obvious that the application of royalty fees is not very even handed at present. Like so many things in this age of accelerating technology, it would seem that the establishment of legalities lags far behind the advancement of the technology itself.

This does provide interesting food for thought when it comes to the subject of how quickly law and regulation can be applied to rapidly changing technologies such as these. It begs the question of how well those making these decisions actually understand the ramifications of the advancements being regulated. In addition, I would surmise that in many cases, the tech will have moved on by the time the legalities are worked out.

Some lawmakers have been flirting with the issue. Reps. Jay Inslee (D-Wash.) and Don Manzullo (R.-Ill.), introduced the Internet Radio Equality Act last spring to nullify the royalty board decision. It has attracted a substantial 148 co-sponsors and helps put pressure on SoundExchange. But a Senate version by Sen. Ron Wyden (D.-Ore.) has only five co-sponsors, meaning the chance of anything happening this year is slim.

Kennedy and Pandora founder Tim Westegren are trying to sound the alarms. And continuing the stiletto theme, Kennedy said they feel like Kitty Genovese, who infamously died from stab wounds outside her New York City apartment building in 1964 after other residents ignored her screams for help.

I had the pleasure of meeting Tim year before last at the New Orleans Jazz & Heritage Festival. He struck me as both extremely intelligent and highly impassioned by his cause. His arguments are very compelling, especially when delivered face to face.

This is a far reaching issue which will be responsible for shaping the face of radio’s Internet aspect once it is settled. Anyone with a stake in this side of the industry should make a point of educating themselves on the subject and monitoring the news about it.

Image courtesy of The Gold Guys, used according to its Creative Commons license