Webcasters Plan Legal Action Over Rates

Lawyers for National Public Radio (NPR) and the Corporation for Public Broadcasting (CPB) are in Washington this week, planning legal action aimed at overturning a ruling from US Copyright Royalty Judges which raised royalty fees for webcasters high enough for some to predict the demise of Internet radio.

“Right now the thought is that the initial response needs to be a legal response,” NPR station WXPN General Manager Roger LaMay told internetnews.com. WXPN 88.5 FM is a non-commercial member- supported radio service of the University of Pennsylvania.

The ruling NPR and CPB plan to fight in court was passed down earlier this week by a panel of judges charged by the U.S. Copyright Royalty Board with establishing the rate for a webcaster performance license.

According to the ruling, the judges were told to establish rates “that would have been negotiated between a willing buyer and a willing seller.” For commercial and for larger non-commercial webcasters the judges set a pay-per-play rate of $.0008 for 2006, $.0011 for 2007, $.0014 for 2008, $.0018 for 2009 and $.0019 for 2010.

“If this were to go into effect it’s going to have public radio stations looking for ways to cut back what we do, as opposed to expanding. Now, there is significant dis-incentive when you’re talking about services that are committed to public service,” LaMay said.

Commercial Internet radio broadcasters were equally upset.

“Left unchanged, these rates would be disastrous. It will not only end Internet radio, but will also stifle innovation as entrepreneurs and investors will abandon this space – leaving a vacuum that will be quickly filled by illegal unlicensed services with no intention of creating legitimate businesses,” a spokesperson for commercial webcaster Pandora said in an email to internetnews.com.

Pandora founder Tim Westergren told internetnews.com his company plans to follow NPR and CPB into court.

A spokesperson for SoundExchange, the non-profit organization which lobbied the Copyright Royalty Board for higher rates, told internetnews.com SoundExchange expected “negotiations” over the rates to continue in both U.S. District courts.

“We’re all fans of Internet radio. We don’t want to see Internet radio go away. These are negotiations. We’re not trying to stick it to anybody. In terms of what happens next? Either side could appeal to the U.S. District court,” SoundExchange spokesperson Wilhem Dicke told internetnews.com.

NPR station manager LaMay said if the rates stay as high as the Copyright Royalty Board set them, it will be independent musicians who depend on Internet radio to get there music out who will be hurt the most.

That’s not SoundExchange’s goal, Dicke said.

“We just want them to play fairly when they use the work of musicians and artists and ultimately the market place is going to determine who succeeds and who doesn’t.” Dicke said.

LaMay said NPR stations can’t compete in that market place.

“There’s nobody in public radio that’s making money overall on their [Web] streams,” LaMay said, “We’re doing them because we think it’s the right thing to do.”

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