The United States Copyright Office on Tuesday rejected an arbitration panel
ruling on Webcasting royalty rates, a decision that brought smiles to the
face of Internet radio executives nationwide.
In a brief note posted on its Web site, the Librarian of Congress rejected the
recommendation by the Copyright Arbitration Royalty Panel (CARP) that would
have set royalty fees at 14/100 of a cent per performance, a price tag
denounced by Webcasters as prohibitive.
“The Register of Copyrights recommends, and the Librarian agrees, that the
CARP’s determination must be rejected. A final decision will be issued no
later than June 20, 2002,” the Copyright Office said.
“In accordance with 17 U.S.C. 802(f), the Librarian is given 90 days from
date of delivery of a CARP report to review the determination and issue a
decision setting forth the final royalty fee and terms of payment. However,
if the Librarian rejects the CARP’s determination, section 802(f) provides
an additional 30 days for the Librarian to render his final determination,”
it added.
Kurt Hanson, who led a grassroots campaign to have the CARP recommendation thrown out, was
positively giddy in reacting to Tuesday’s rejection.
“This was what Webcasters had hoped for when we originally objected to the
CARP recommendation. I think the decision (on a royalty rate structure) is
in good hands. I think they understand the legislative intent of a statutory
royalty, which is to encourage the growth and diversity of the industry,”
Hanson said.
“I have confidence that whatever mechanism they use, it won’t destroy the
industry,” he added.
For its part, the Recording Industry Association of America (RIIA) said
today’s rejection should not be automatically seen as an automatic win for
Webcasters.
“The Librarian has rejected the arbitration panel’s determination, but we
do not know why or what decision the Librarian will ultimately make based
on the evidence presented,” said RIAA president Cary Sherman.
“Since both sides appealed the panel’s determination, anything is possible.
We look forward to the conclusion of this process on June 20th, and to the
day when artists and labels finally get paid for the use of their music,”
Sherman added.
SoundExchange, the RIAA-run group
responsible for royalty collection, seemed more resigned to the fact the
structure would be modified in favor of the Webcasters.
A statement from SoundExchange executive director John Simson was suggesting
long-term “creative solutions” between the recording industry and the
Webcasters. “Given the complexity of the issues, I am not surprised by the
Librarian’s decision. I remain confident that we can find creative
solutions to enable Webcasting to thrive while providing recording artists
and those who invest in sound recordings a fair and equitable royalty in
return,” Samson said.
“Over the past three years, Webcasters have paid for bandwidth, rent,
hardware, software and other business expenses. It is time that they finally
start to pay the Artists and record companies whose creative output is the
most important
component of their business,” he added.
Samson called for the two sides to find “long term solutions” but did not
address the potential of a reduced rate structure from the copyright office.
Regardless of the RIAA spin, Tuesday’s landmark decision is seen as a
massive win for the Webcasting community, which spent the last few months in
a bitter campaign to have the CARP ruling thrown out.
Earlier this month, the anti-CARP lobby took
its campaign to Washington to protest the royalty rate structure they
believe would have “effectively bankrupt” the entire sector.
That came on the heels of a ‘Day of Silence’
protest against the ruling.
The original CARP recommendation had fixed royalty fees for Web radio stations at 14/100 of a cent per
performance, retroactive to October 1998.
