Radio Broadcasters Lose in Court

By Robert Menta - 8/03/01

In a setback for terrestrial radio stations that stream their broadcasts over the Net, a federal court has ruled that they must pay to stream.

The loss means that broadcasters are liable for fees to the record industry retroactive to when their Net broadcasts first aired. That means tens-of-millions of dollars in past fees are owed by network giants like Infinity Broadcasting alone.


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The heart of all this stems to the Digital Millennium Copyright Act, signed into law by President Clinton a few years back. The bill, closely lobbied by the record industry's powerful DC arm the Recording Industry Association of America (RIAA), requires net broadcasters to pay licensing fees, something terrestrial stations don't pay.

Traditional radio felt it was exempt from these fees when it entered the Net radio arena. Last December, the Copyright Office ruled radio broadcasters are liable for these fees, sparking a court challenge by the equally powerful Radio lobby the National Association of Broadcasters.

Yesterday, U.S. District Judge Berle M. Schiller, ruled against the radio industry. Shiller called the ruling by the copyright office "rational" and stated the law does not specifically offer relief for traditional radio broadcasters. He said the courts should defer to the copyright office's decision.

``While technology has increased exponentially in the last 20 years, Congress has relied on and vested in the Copyright Office certain powers to cope with the ever-evolving technological landscape,'' Schiller wrote. ``It is this interplay between Congress and the Copyright Office, which must set the guidelines. As much as possible, courts should be passive players in this quickly changing area.''

The broadcasters are expected to appeal. Many have already temporarily removed their streams from the Net because of a separate dispute over an unwillingness to pay actors in radio commercials extra fees for running their ads Online. They need to bring those streams back up if they want to compete.

With Net radio growing significantly over the last year, the radio industry does not want to give up any more turf to Net radio stations, hoping to challenge them like the record industry has so far challenged and absorbed Net music sites. Net radio only companies, who know they must pay licensing fees, are presently in a vicious fight over what the DMCA fees should be. The law is giving them first stab at negotiating among themselves, but record industry has been very aggressive with its licensing demands, insisting on fees up to 15% of total gross revenue. Net radio companies call these demands extortion and are presently pressing their case to the Copyright Arbitration Royalty Panel on the matter.

Both terrestrial radio conglomerates like Clear Channel Communications, and Net radio investors like Microsoft and Yahoo have lots of money. They can and will continue this fight, which means this is all a long way from being settled


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