RAIN 7/6: Court finds CRB appointments unconstitutional, but tweaks law to fix it

Paul Maloney
July 6, 2012 - 11:20am

The U.S. Court of Appeals has found that the judges that determined webcasting royalty rates were appointed unconstitutionally -- but also immediately rectified that by striking part of the statute.

The Copyright Royalty Board is the panel of judges, appointed by the Librarian of Congress, that sets the default royalty rates for Internet radio's use of copyright recordings. Intercollegiate Broadcasting Services, which represents educational institution-based broadcasters and webcasters, appealed the CRB's final royalty determination for 2011-2015 (specifically, the $500 annual minimum royalty fee) (prior coverage here). As part of its appeal, the IBS argued the Librarian's appointment of the judges violated the Appointments Clause of the Constitution, and thus its determinations null and void.

In its just-released decision in that case, the Court agreed with IBS that the CRB appointments were indeed unconstitutional. However, that problem was solved by the Court by simply striking the language of the statute that limited the Librarian's ability to remove judges without cause -- thereby satisfying the Appointments Clause.

What's this mean for webcasters and royalty rates? Apparently, not much. The vast majority of webcast services operate not under the actual CRB-determined compulsory, but under agreements reached between SoundExchange and various groups of webcasters, published in the Federal Register. These agreements remain in effect.

However, the $500 minimum fee argued against by IBS has been remanded back to the (now-Constitutionally-appointed) CRB for review.

We're looking for more clarification on this story from authoritative sources, and will follow up as warranted. Read the decision itself here.

Michael Schmitt
July 6, 2012 - 11:20am

Fred Wilson"From board meeting to board meeting, we are seeing a similar pattern. Web is flattish. But mobile is growing like a weed." So writes venture capitalist Fred Wilson in a new blog post entitled, "Mobile Is Where The Growth Is."

As we've touched on time and again in RAIN, this phenomenon directly impacts the web radio industry: the major players -- Pandora, Slacker, TuneIn and others -- all have massive mobile audiences. In some cases mobile listeners are even the majority.

This transition "presents both great opportunity and great challenges," writes Wilson (pictured), who co-founded Union Square Ventures (which has invested in companies like Twitter, Tumblr, Foursquare, Etsy and others).

For example, there are different expectations when it comes to mobile. "Mobile does not reward feature richness. It rewards small, application specific, feature light services... The phone is the equivalent of the web application and the mobile apps you have on your home screen(s) are the features."

Another big mobile challenge is monetization, as we've seen with Pandora (RAIN coverage here). "Monetization is different" on mobile platforms, Wilson writes. "Approaches like display advertising don't work as well on mobile as they do on the web."

Not that the money isn't there. Juniper Research now projects that mobile ad spending delivered via mobile apps will reach $7.1 billion in 2015, "a nearly three-fold increase over the span of three years," says Boy Genius Report (here).

Wilson points to Twitter as a good example of mobile monetization: "The ads are the default content object (the tweet) and are delivered right in the primary user experience (the feed/timeline). It's not surprising that more than half of Twitter's ad revenue is coming from mobile."

For radio, does this mean mobile ads should be audio (radio's "default content object") delivered in between songs ("the primary user experience")? Or perhaps a different, untried and experimental approach?

Indeed, Wilson argues the winners will be those companies and services that can "make a hard right turn super fast without flipping over the car."

You can find Wilson's full blog post at AVC.com here.

Michael Schmitt
July 6, 2012 - 11:20am

Mobile devicesNew devices rumored to be coming soon from Amazon and Apple may aim to put smartphones and tablets in the hands of new consumers, like those who have so far stuck with "dumbphones." That means more people potentially accessing apps and streaming web radio.

Amazon is rumored to be building its own smartphone. Not so far-fetched, considering it already offers the Kindle Fire -- an Android tablet device (RAIN coverage here).

GigaOM predicts the goal of a smartphone from Amazon "would be to go after the 50% of people who don't have a smartphone." Indeed, "a survey earlier this year found that consumers were more interested in a phone from Amazon than they were in one from Facebook," points out All Things Digital (here). 

"If Amazon can give consumers a dirt cheap but very capable smartphone, it could attract a number of users at launch and set it up for better success as it puts out more capable phones down the road," comments GigaOM (here).

Meanwhile, a myriad of publications report that Apple will soon launch a smaller (7" screen), cheaper (around $200) iPad. Such a move would not only hurt competitors like Google -- which unveiled its own relatively small tablet recent, more here -- but also get more consumers using tablets.


"As you drop the price point and size, you are opening up consumers you weren't addressing before," said Brian White, an analyst with Topeka Capital Markets. "Having something you can hold in one hand seems to matter to some people and may matter in emerging markets," said Frank Gillett, a Forrester Research analyst.

In June, a study found that around a third of U.S. Internet users owned a tablet (more here). A recent Gartner survey found that 40% of mobile users listen to music on their devices (more here).

Paul Maloney
July 6, 2012 - 11:20am

For Friday/weekend fun, take a look at this 1934 Simplex Model P radio that a radio enthusiast "refurbed."

We're no electronics experts here, but it looks like some great Depression-era "tubes & wires porn," if that's your thing! But the end result, say, getting to hear "Call Me Maybe" through a box that looks like it fell off Tom Joad's wagon, may not actually be worth all the trouble.

In which case, we'd like to point you back to an earlier story in RAIN, here, which shows how to install an Android smartphone in an FM radio to make it an Internet "receiver."

Read (and see) lots more J.W. Koebel's blog here. H/T to HackaDay.com here.