RAIN 10/9: Chaffetz Net radio bill includes additional considerations for webcasters

Paul Maloney
October 9, 2012 - 11:55am

Most of the focus of the recently-introduced Internet Radio Fairness Act (in RAIN here) centers on the change of the legal standard by which Net radio royalties are determined. Namely, the bill calls for abandoning the "willing buyer/willing seller" standard in favor of what's known as 801(b) (for its location in the Copyright Act).

But the bill isn't limited to this single point. In a Broadcast Law Blog post, Net radio legal expert David Oxenford (pictured) explains some of the other points included in the bill intended to enhance the viability of a webcasting market in the U.S.

(To review, Internet radio sound recording royalties are based on what Copyright judges think a willing buyer and willing seller would agree to in a marketplace transaction -- a hypothetical one at that. If royalty judges were compelled to base their decisions on the 801(b) standard, as they are for satellite and cable radio royalties, they'd have to consider how their decision (A) Maximizes the availability of creative works to the public; (B) Affords the copyright owner a fair return on his/her creative work and the copyright user a fair income under existing conditions; (C) Reflects the relative roles of the copyright owner and the copyright user with respect to creative and technological contributions, capital investment, cost, risk, and contribution to opening new markets; and (D) Minimizes any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.)

In addition to the very important standards change, first of all, the IRFA calls for rates set by Webcaster Royalty Act settlements expiring in 2014 be extended through 2015. But perhaps more importantly, the bill removes "the precedential effect" of past royalty decisions. Moreover, it "explicitly put(s) the burden of proof on the parties seeking a royalty that the royalty... is reasonable -– a standard that is common in ASCAP and BMI rate court litigation, but is not at all addressed in the current Copyright Act addressing the sound recording performance royalties set by the CRB," Oxenford writes. Additionally, the IRFA changes the law in that it specifically removes "any suggestions that certain aspects of recent royalty decisions were in fact the preferred way of reaching a royalty decision." 

One important (and contentious) point between record labels and webcasters has been the "promotional" aspect of online plays. Remember, broadcasters' exemption from this royalty for over-the-air plays of copyright sound recordings is based on the fact that playing this music helps sell it. The record industry has a long history of reinforcing this very argument by way of promoting music to radio (even as far as committing payola, in some instances). But labels have gone out of their way to claim that online play doesn't at all help their sales (despite evidence to the contrary). The Chaffetz bill requires that a royalty rate decision should give "full-value" to "the promotional value of the playing of music by the service" and "the costs of the digital music service in putting together the programming that it features," Oxenford explains. Oxenford adds that the bill would also change to the law regarding "ephemeral" royalties -- for the use of music that's reproduced as cached files on servers, etc., which he intends to explore in a later piece.

Read Oxenford's report in Broadcast Law Blog here.

Paul Maloney
October 9, 2012 - 11:55am

Earlier in the year, I wrote an article for RAIN entitled "The Song Remains the Same" (here) which discussed how the noise around the subject of streaming was hurting potential dollars to come into the marketplace for all players in the space -- be it pureplay companies or broadcasters. 

Today, there is another wrinkle that has appeared in the space that could start to hamper dollar flow and that is one around technology. So, I have titled this article "Song 2," a follow up to my original article in January. ("Song 2" was also a big alternative rock hit in the 90’s and - somewhat appropriate to what’s happening in the marketplace -was recorded by the band Blur.)

I want to center on the debate whether or not broadcasters should stream separate commercials in their online versus over-the-air product.

There is a lot of discussion around this primarily because the ad breaks in the streams of many broadcasters sound terrible. Spots run over one another. Some spots don’t start on time. Some of the breaks finish when the over the air broadcast has already started, and spots may finish 20 seconds into the start of a song. While some have categorized the decision to discontinue running separate breaks as a royalty issue — at the heart of it, this is more of a product and, specifically, a technology, issue—and it’s one that will put a cap on money that flows into the market.

Personally, I do not believe that the broadcasters should pull their ability to insert ads into their streams. That said, the issue is an understandable one from the broadcaster’s perspective. To keep your current listeners engaged, and to attract new listeners, the stream has to sound good...

Continue reading Lipset's Guest Essay "Song 2" here.

Paul Maloney
October 9, 2012 - 11:55am

Clear Channel has named Jerrell Jimerson Senior Vice President of Product for Digital. Jimerson will "oversee the roadmap, product definition and design" for iHeartRadio, the company's digital radio service, and all Clear Channel radio station and personality websites. He'll manage the iHeartRadio Product team, and will work with the Digital team to expand the platform and deploy new offerings.

Jimerson's more than 20 years of experience and product development background include his tenure as President/CEO of Songbird. He previously served as an "Entrepreneur in Residence" at Sigma Partners; VP/GM of Consumer, Credit, Mobile & New Ventures at PayPal; and VP of Broadband, Consumer Services and Digital Home at Yahoo! He's also held product and general management positions at Apple, Netscape, and AOL.

Jimerson will report to Brian Lakamp, President of Digital at Clear Channel Media and Entertainment, effective immediately.

Paul Maloney
October 9, 2012 - 11:55am

TuneIn and Backbone Networks are live streaming panels from the SF MusicTech conference today until 8pm CT (6pm PT) across three channels.

The streams are free to listen. The direct link to the audio is here (or simply search for "SF MusicTech" from any TuneIn product).

Some of the conference highlights that will be streamed (all times Pacific):

  • A conversation with Tim Westergren, Pandora, at 10:45am
  • A panel featuring Michael Franti at 4:30pm
  • Thomas Hutchings, TuneIn, discussing "The Connected Car" at 10:45am

TuneIn is the free online audio agggregation and tuning service that offers over 70,000 stations of music, sports, news, and current events from around the world. Backbone Networks creates "complete Internet radio stations" and networks of stations, taking care of the technical part of broadcasting. Backbone operates and hosts the largest network of college and high school noncommercial educational (NCE) radio stations, as well as public radio, commercial and sports radio stations.