Web Radio Law Changes Introduced

In a last-ditch effort to protect smaller Webcasters from what they describe
as unfair royalty obligations, three influential U.S Congressmen on Friday
introduced the “Internet Radio Fairness Act,” a new law seeking to change
existing Web radio laws.

Carrying through with a promise to
introduce legislation that would essentially codify “fair use” provisions of
copyright law, Rep. Rick Boucher (D-VA) joined with Reps. Jay Inslee (D-WA),
George Nethercutt (R-WA) to introduce the new legislation.

The bill is designed to make the Copyright Arbitration Royalty Process
(CARP)
“more fair for smaller entities,” the Congressmen said in an announcement
that the Bill would go before the House of Representatives’ Judiciary and
Small Business Committees.

The three have been among the most vocal critics of the controversial CARP
royalty rate structure that sets the
per-performance fee at 0.07 cents per performance, retroactive to October
1998.

In a statement, Rep. Inslee said, “Congress should support creative and
innovative uses for new technology, not drive small web radio broadcasters
out of business with huge fees. We need to refine the current law on
digital technology quickly, before more small web radio broadcasters are
forced out of business.”

“Changing the standard for setting royalty rates is crucial to the survival
of this innovative sector. We seek a balance between just compensation and
Internet development. This process must be fair but not free,” he argued.

Rep. Nethercutt joined in blasting the CARP ruling which was effectively
forcing smaller Webcasters out of business. “No one wins under the current
CARP standard — Webcasters will close shop, consumers lose access to a wide
selection of programming, and copyright holders collect nothing,” Nethercutt
said. “Our legislation protects small businesses from the onerous CARP
ruling, ensuring the continuation of Webcasting, and incidentally, creating
a long-term revenue stream for copyright holders.”

Rep. Boucher described the law that produced the royalty rate “flawed” and
said the Bill would seek to fix the process that he said was weighed heavily
against the Internet radio industry.

Highlights of the “Internet Radio Fairness Act” include:

  • Small businesses (six million dollars in gross revenue) will be exempted
    from the CARP fees for web radio. The royalty ruling, which was accepted by
    the Library of Congress, would stand for larger Web radio providers.
  • All future CARP processes must change the royalty rate standard from the
    “willing-buyer/willing-seller” to the “traditional” standard that was
    enacted by the 1976 Copyright Act. Royalty payments for the small
    businesses that have been exempted from the current CARP decision will be
    calculated using the traditional standard, and rolled into the next CARP.
  • Small businesses will be exempted from the payment requirement for
    participation in future CARP proceedings. During the most recent
    arbitration process, all participants were forced to pay an equal share of
    the total costs, forcing many small businesses out of the process.
  • All future CARPs must eliminate fees for temporary recordings
    (“ephemeral recordings”) that Web radio broadcasters create to facilitate
    the transmission of the song to users. “The Registrar of Copyrights has
    determined that these temporary recordings have no independent economic
    value, and should not be subject to a separate royalty payment,” the
    Congressmen argued. Broadcasters should not be charged for temporary storage
    files that listeners never hear and which are not saved.
  • All future CARPS must comply with the Regulatory Flexibility Act. This
    will require CARPs to specifically consider the impact of any decisions on
    small businesses.

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