The Copyright Royalty Board had a chance to ask itself, "My God, what I have I done?", when it considered a request to their March ruling that would massively hike fees Web radio stations pay to copyright holders. But, on Monday, the board denied the request.
Web radio is different than broadcast radio in that the hosting costs increase precisely as the listenership increases. With streaming web radio, information on the exact number of listeners accessing the stream at any given moment or period is available, and easy to obtain, unlike broadcast radio which is just out there and no one knows how many people are listening (so how do they determine ad rates?) The more listeners you have the more you pay in hard costs — some server’s gotta host the stream. Of course stations like mine and the network of NPR stations that have no commercial revenue eventually run into a financial wall once that audience figure reaches a certain amount.
With royalties it gets more complicated. While traditional terrestrial radio does pay songwriter/publishing royalties for the musical work itself, in the U.S. they don’t pay performance royalties for the sound recording under the rationale that airplay promotes the songs, which benefits the copyright holders. (This determination was mostly due to the radio industry lobbying congress not to collect these royalties.) Web radio, however, along with satellite and cable services, does pay performance royalties — these are the rates that are being raised now. (If this discrepancy sounds illogical, it’s because it is.)
Now, broadcasters are eligible for statutory licenses for these new performance royalties. These statutory licenses set royalty rates so that each station doesn’t have to license each song individually. Until now, if a webcaster’s profit was below a certain amount, they have been eligible to pay a set yearly fee, and if they met certain criteria they have been able to pay royalties as a percentage of their profits, not as a per-song fee. Registered 501(c)(3) non-profits have been eligible for reduced rates regardless of their stream traffic....
...Who is this agency that is proposing making this change? They are not an elected body — the Copyright Royalty Board is made up of a few people appointed by the Library of Congress Copyright Office. They used to be a group of arbitrators but since 2004 they are a group of judges. (I wonder if Gonzales, Cheney etc. have any pals in there?)
The new rates are supposed to have been based on the model of the so-called willing buyer and willing seller in the marketplace — this according to the wording of the Digital Millenium Copyright Act of 1996. But where does this “market value” come from? Does it mean that if I play more popular music on my streaming radio I should pay more? I’m confused. (I think I’m supposed to be confused.) Who is determining this value? In this case the CRB seems to be looking towards agreements made between the major record labels and the largest commercial webcasters, but this is hardly a free market model. It also seems to ignore the fact that the “value” of a song would change depending on the context — if I’m listening to a web radio stream I can’t control what I hear, which is different from purchasing the track.
Many more links and content on the subject found at this very good round-up that ran today.