By Richard Menta 1/17/07
According to documents released on Monday the US Copyright Royalty Board (CRB) denied the request of internet broadcasters to reconsider a new royalty schedule that the broadcasters say is onerous. The board dismissed the motion stating '"None of the moving parties have made a sufficient showing of new evidence or clear error or manifest injustice that would warrant rehearing".
Led by NPR, Webcasters complained that the new royalties were too high and would eliminate all but deep pocketed corporations from the Web radio landscape. The panel of judges did not buy that argument and reaffirmed its original decision. Those most damaged by the decision are non-profit Webcasters. The old rate schedule required Webcasters to pay 12% of profits with a minumum yearly fee when profits are not achieved. As most of the streams on Internet radio come from non-profit or small time online broadcasters the old rate was workable for them - though the fees were high enough to drive out hobby Webcasters. The new rate schedule requires royalties to be paid based on average listening hours, meaning a non-profit Webcaster with a big audience is now required to pay the same fees as a commercial entity with a similar sized audience. Unless the US Court of Appeals for the District of Columbia Circuit agrees to hear an appeal the new rates take effect May 15th.
"The CRB's ill-informed decision to increase royalty fees to this unjustifiable level will quite simply bankrupt most webcasters and destroy internet radio," said Jake Ward spokesperson for opposition group SaveNetRadio. Meanwhile, the ruling was greeted enthusiastically by SoundExchange who collect the royalties. Said SoundExchange's general counsel Michael Huppe "We are gratified that the CRB has upheld its decision". The royalty board also refused to grant a stay on payment of back royalties even though legal appeals are in progress.Within the month the CRB expects Webcasters to pay millions in retroactive royalties.
Disatisfaction among Webcasters is high and this most recent decision will only intensify their opposition. SaveNetRadio is an alliance of Webcasteres that announced their intentions Monday at the Radio and Internet Newsletter (RAIN) Las Vegas Summit. The group received vocal support from Digital Media Alliance (DiMA) as well as Net radio's Pandora and Live365. We hope that the CRB will heed the call to reconsider its ruling. We also need Congress to fix the system so that webcasters can stay in business, continue to innovate and generate royalties to artists without facing the threat of bankruptcy every several years."
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