CARP Rejected. Net Radio Gets Reprieve - For Now

By Robert Menta 5/21/02

D-Day for Net radio came and Webcasters can now take a breath. The Librarian of Congress rejected the Copyright Arbitration Royalty Panel's (CARP) recommendations for fees on Internet radio.

The proposed fees called for webcasters to pay the record companies 0.14 cents per listener per song, a charge not required by terrestrial radio stations. These fees - which if passed would have been owed retroactively to 1998 - would have forced out of business all online radio stations without a deep-pocketed parent company to support them. That's because the young industry has yet to figure out what has proved to be an elusive profit model.

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Needless to say, these stations became very vocal against the CARP ruling, even holding a Day of Silence two weeks ago to both protest the proposal as well as to bring visibility to their plight. The action by the Librarian on Congress seems to validate that their protests were heard. The order as posted at read as follows:

In the Matter of Digital Performance Right in Sound Recordings and Ephemeral Recordings
Docket No. 2000-9 CARP DTRA 1&2


On February 20, 2002, the Copyright Arbitration Royalty Panel (CARP) reported its determination to the Librarian of Congress in the above-captioned proceeding. 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.

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.

DATED: May 21, 2002

SO RECOMMENDED. Marybeth Peters, Register of Copyrights.

SO ORDERED. James H. Billington, Librarian of Congress.

The final determination is now postponed for another month. Net radio is not out of the woods yet, though. While Net radio fees can be dropped to a more reasonable level, they can also be raised if the Librarian of Congress feels that the CARP proposal was actually insufficient remuneration.

If that second scenario sounds unlikely, remember that Record Industry Association of America (RIAA) President Hillary Rosen has been complaining all along that the CARP recommendations are much too low. Rosen is a Beltway lobbyist with accomplished skills in backroom negotiations. DC is her stomping grounds and if there is a behind-the-scenes deal that can be pulled off, she is up to the task. That's why she is paid $1 million a year by the industry to make sure things go their way on Capital Hill.

The RIAA's Cary Sherman posted this comment on the decision on the RIAA site:

“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. 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.”

Only the collective voice of consumers can negate the RIAA's prowess in the legislative arena. That's because numerous voices are also votes. That voice is what most likely produced today's ruling and at least delayed the record industy's attempt to control Net radio. If that happens we know the labels will be paid, but think twice if you expect the artists, who the RIAA has perpetually cliamed to represent, will see as much as a dime.

Now is a good time to get louder.


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