Internet Radio Royalty Rates

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On Mar 2 2007 the United States Copyright Royalty Board (CRB) announced new royalty rates for webcasts, effective from 2006 to 2010.pdf

National Public Radio (NPR) has filed a motion for rehearing, calling into question many of the decision's technical details which NPR and others argue will severely harm Internet radio.

The New Rates

In the old, percentage-based fee system, webcasters paid SoundExchange -- the Recording Industry Association of America-associated organization that pushed the Copyright Royalty Board to adopt the new rates -- between 6 percent and 12 percent of their revenue, depending on audience reach. The new system charges all webcasters a flat fee per song per listener;

2006 $.0008 per performance
2007 $.0011 per performance
2008 $.0014 per performance
2009 $.0018 per performance
2010 $.0019 per performance
A "performance" is defined as the streaming of one song to one listener;
The minimum fee is $500 per channel per year.
For noncommercial webcasters, the fee will be $500 per channel, for up to 159,140 ATH (aggregate tuning hours) per month.

The Internet Radio Equality Act

The Internet Radio Equality Act has been introduced April 27 2007 by Representative Jay Inslee (D-WA) and eight cosponsors, with more cosponsors on the bill expected shortly. [1]

The bill has five major provisions:

  • Nullifies the recent decision of the CRB judges
  • Changes the royalty rate-setting standard that applies to Internet radio royalty arbitrations in the future so that it is the same standard that applies to satellite radio royalty arbitrations -- the 801(b)(1) standard that balances the needs of copyright owners, copyright users, and the public (rather than "willing buyer / willing seller").
  • Instructs future CRBs that the minimum annual royalty per service may be set no higher than $500.
  • Establishes a "transitional" royalty rate, until the 2011-15 CRB hearing is held, of either .33 cents per listener hour, or 7.5% of annual revenues, as selected by the provider for that year. Those rates would be applied retroactively to January 1, 2006. (The logic behind this rate, incidentally, is an attempt to match the royalty rate that satellite radio pays for this royalty -- thus the name of the bill.)
  • Expands the Copyright Act’s Section 118 musical work license for noncommercial webcasters to enable noncomms to also perform sound recordings over Internet radio at royalty rates designed for noncommercial entities, and sets an transition royalty at 150% of the royalty amount paid by each webcaster in 2004. (Note that this amount would be a set, flat fee through the end of the decade.)
  • For future CRBs (e.g., 2011-15), adds three new reports in the CRB process: The Assistant Secretary of Commerce for Communications and Information will submit a report to the CRB judges on the industry impact in terms of competitiveness of the judges' proposed rates; at the same time, the FCC will submit a report to the CRB judges on the effects of the judges' proposed rates on localism, diversity of programming, and competitive barriers to entry; and the Corporation for Public Broadcasting will submit a report to Congress and the CRB judges on the effect of the the judges' proposed rates on their licencees.

The site is asking listeners to call their Representative and ask him/her to "cosponsor the Internet Radio Equality Act, introduced by Representative Jay Inslee." Once listeners click the "Call Your Representatives" button on the site and enter their zip code, they are given their Representative's House office phone number and a list of "talking points" to emphasize.