Webcasters find friends in Congress

U.S. Rep Jay Inslee (D-Wash.) and Donald Manzullo (R-Ill.) introduced a bill that aims to throw out a controversial new royalty structure for music streams, passed in March by a panel of three copyright judges, that many webcasters say will put them out of business if it goes into effect.
Webcasters support the lawmakers’ measure, which would set rates at 7.5 percent of streaming-based revenue–or roughly the same level as those for satellite radio–instead of basing the rate on the annually escalating, per-play standard that the record labels wanted and the judges decreed. Internet radio station operators have been bombarding Congress with pleas to intervene, an effort that became more urgent earlier this month after the copyright panel rejected all requests to reconsider its decision. In an arcane but crucial legal point, the bill would also change the standard by which future royalty rates are set from the nebulous “willing buyer/willing seller” concept to one that webcasters say more fairly balances the needs of copyright owners, users and the public good. For pubcasters, the new bill would set the new rates at 1.5 times what they paid in 2004, which was last official year of the system’s previous streaming rate deal with the labels. CPB has historically covered pubradio’s streaming fees. It would also place pubcasters’ Web royalty determination within Section 118 of the Copyright Act, where other noncommercial royalties such as ASCAP and BMI are covered. This would establish pubradio streaming royalties as being fundamentally different from those for commercial broadcasters. Under the controversial new structure, pubradio stations whose total monthly user-hours exceed pubradio’s average would be subject to commercial rates. As a result, roughly 20 percent of pubradio stations could face significant new streaming fees, the copyright judges estimated. “This bill will provide a long-term solution that is fair for all sides,” said Andi Sporkin, NPR spokeswoman. Sound Exchange, an organization created by record labels to collect digital distribution fees, opposes the proposed measure. Webcasters are coming to Washington May 1 to try to convince lawmakers to pass the bill, and soon. The new webcasting fees go into effect May 15.