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NPR Appeals Internet Streaming Music Rates

National Public Radio (NPR) filed a formal appeal with the U.S. Copyright Office today protesting a recently approved hike in streaming Internet music royalty rates. The increase, many webcasters claim, will force them out of business.

NPR, for its part, claims the rate hike will make it cost prohibitive for public radio stations to continue their commitment to online music and providing exposure for emerging and non-mainstream artists.

"The Board's decision to dramatically raise public radio stations' rates was based on inaccurate assumptions and lack of understanding of the issues," Andi Sporkin, NPR's vice president for communications, said in an e-mail statement to internetnews.com.

In its appeal, NPR called the rate hike "arbitrary and capricious, an abuse of discretion and/or unsupported by sufficient evidence."

Sporkin said NPR plans to follow the Copyright Office appeal with litigation in the U.S. Court of Appeals for the D.C. Circuit, although no date was been set for filing the legal appeal.

According to the March 2 ruling by the U.S. Copyright Royalty Judges, commercial and larger non-commercial webcasters will pay a rate of $.0008 for 2006, $.0011 for 2007, $.0014 for 2008, $.0018 for 2009 and $.0019 for 2010. Most webcasters now pay a rate of $.0012 per stream.

"The new rates inexplicably break with the longstanding tradition of recognizing public radio's non-commercial, non-profit role," Sporkin said, "while the procedures we're being asked to now undertake for measurement are non-existent, arbitrary and costly."

Sporkin added the copyright board erred by equating public radio with commercial radio. Public radio, she said is a public service mission to serve underserved and unserved audiences.

"In our Internet music efforts, those audiences include both listeners and the music community that seeks public radio to reach those listeners. We hope the Board will reconsider," Sporkin said.

SoundExchange, the non-profit organization performance rights group that lobbied the Copyright Royalty Board for higher rates was unavailable for comment.

Tim Westergren, founder of the Internet radio service Pandora, praised the NPR appeal. "[The rate hike] is incredibly counter productive," he said. "The actual ruling shocked everybody."

Westergren said the rate hike was reflective of the relative lobbying power of SoundExchange and the music industry over the nascent Internet radio business. "My sense of it is they wanted to get as much as they could."

Westergren said the panel of copyright judges didn't fully understand the dynamics of Internet radio. "Internet radio can promote a much broader range of music," he said. "There's a whole sea of music out there that would never be heard on commercial radio."

A final decision on the rates could take months, if not years, particularly if NPR ultimately decides to pursue the issue in federal court.