Webcasting fight moves to Congress

After weeks of squabbling between webcasters and the Copyright Royalty Board, Congress has stepped in to protect internet webcasters.

Rep. Jay Inslee (D-WA) and Rep. Don Manzullo (R-IL), along with seven other cosponsors, introduced a bill in Congress (pdf) yesterday that could nullify punishing new rates recommended by royalty collection agency SoundExchange and set by the three judges of the Copyright Royalty Board (CRB) (pdf). These rates, according to many advocates, could have put internet radio in jeopardy for both large and small webcasters, affecting the fees they pay to play music online.

The Internet Radio Equality Act aims to put the brakes on a controversial March 2 decision by the CRB, which would set escalating royalties retroactively from 2006 to 2010 on webcasters, in addition to a $500 annual fee.

Webcasters, including even large internet services and terrestrial broadcast groups such as Clear Channel and NPR, have been fearing the decision, which they claim could have raised royalty rates between 300-1200%, a rate that could put them out of business. SoundExchange has been playing hardball, and has been rather unsympathetic to the webcasters' cause. The CRB has been on the side of SoundExchange since the beginning, and a few weeks ago threw out an appeal by commercial webcasters, National Public Radio and others to review the new rates and postpone a May 15 deadline for the introduction of the royalty schedule (pdf).

The new bill, if passed, would throw out the CRB's decision and set royalty rates at 7.5% of the webcaster's revenue for 2006-2010, the same rate paid by satellite radio. Alternatively, webcasters could decide to pay 33 cents per hour of sound recordings transmitted to a single user. Royalty rules for noncommercial radio such as NPR would be reset.

Webcasters are applauding this move. National Association of Broadcasters (NAB) Exec. VP Dennis Wharton said, "We will work with Congress to craft a solution that helps ensure the survival of a fledgling audio platform."

"This bill asks Congress to reinforce its historic acknowledgement that public broadcasting has a place in the media landscape by modernizing section 118 of the Copyright Act for the 21st century," said NPR VP/Communications Andi Sporkin. "The CRB Board would not consider the public service aspect of more than 800 stations across the country when it made its recent decision. This bill will provide a long term resolution that is fair for all sides."

"Since the CRB's March 2nd decision to dramatically and unfairly increase webcaster royalty rates, millions of Internet radio listeners, webcasters and artists have called on Congress to take action," said Jake Ward of the SaveNetRadio coalition. "Today Congress took notice, and we thank Mr. Inslee for leading the charge to save music diversity on the Internet."

Ward continued, "This bill is a critical step to preserve this vibrant and growing medium, and to develop a truly level playing field where webcasters can compete with satellite radio. The Internet Radio Equality Act is the last best hope webcasters, artists, and listeners have to keep the music playing."

Bill Goldsmith of RadioParadise said, "It's now time to step up our pressure on Congress -- specifically the House, at this point -- to address this issue quickly, hopefully before the new rates go into effect on May 1."

Tim Westergren of Pandora.com also issued a call to arms for webcasters and listeners. He claimed, "Following our outreach to Pandora listeners, every congressional office was flooded with constituent phone calls, emails and faxes - literally hundreds of thousands in just 5 days! The entire fax system on the Hill was brought to a standstill. We had to hand deliver the faxes!" Westergren echoed the challenge of contacting congresspeople to gain support for the the bill.

Many webcasters, including Goldsmith, Westergren, Soma.FM's Rusty Hodge and others plan to travel to Washington next week to lobby congresspeople themselves.

In recent months, SoundExchange has been waging a hard-fought war in their attempts to raise the rates to extreme levels. The group's front man, Jon Simson, has taken a 'let them eat cake' approach to the plight of webcasters, claiming that they could merely sell more advertising. "Webcasters have a number of opportunities to maximize revenue with ... banner ads, pop-ups, video pre-rolls, audio commercials," claimed Simson. If only it were that easy.

He went so far as to even trot out 'big name artists' who back their decision, people like Michelle Shocked, Twisted Sister's Jay Jay French and Big Star/Golden Smog drummer Jody Stephens. Okay, so they aren't big names, but seeing a renowed indie rocker (and self-described socialist) like Shocked on there is, well, rather shocking. At least we've got Bryan Adams and Talking Heads' David Byrne (a webcaster himself) on our side.

And in a rather sneaky move, Simson offered his own olive branch, claiming that SoundExchange is open to working with webcasters to cut their own deals. But this sounds a bit like cutting a deal with the devil. Soma.FM's Hodge fears that this could open the door to the recording industry to demand their own deals, namely forcing webcasters to play whatever less-than-desirable product they're trying to push down the public's throats, in exchange for relaxed royalty payments. Hodge calls this "Dark Payola," in that it's the opposite of payola but with all the effects. In other words, the RIAA has webcasting by the you-know-whats.

So, what can webcasters and listeners do to support this bill, and to stop this crazy thing perpetrated by the RIAA, SoundExchange and the CRB? Many of the grassroots efforts to fight the CRB ruling have been combined at SaveNetRadio.org, which has become a clearing house of information on the proposed royalty rates, and the damage it could do to a growing form of media. The group has pleaded with supporters to contact their representatives in Congress to help support the Internet Radio Equality Act. Webmasters and webcasters alike can go to their website to download banners and recorded PSA's to play on streams. In addition, Kurt Hanson's Radio and Internet Newsletter is the best resource on the internet for the latest on this issue. You can also find more links and resources on the right hand side of this site.

Next Tuesday, May 1, webcasters, musicians, independent record label personnel and others have planned a "Hill Walk" in Washington DC, where small groups of SaveNetRadio coalition members will spend the day going from Congressional office to Congressional office, meeting with members of Congress and their staffs. And on Tuesday May 8, many webcasters will go quiet in a "Day of Silence" to help draw attention to the issue.

LTR, a strong supporter of internet radio, wishes everyone involved in this the very best of luck.