RAIN 8/15: D.C. think tank calls for fairer royalty standard for webcasters

Paul Maloney
August 15, 2012 - 1:30pm

A new paper from a Washington, D.C. think tank clearly recounts how entrenched interests crafted copyright law to establish copyright royalty obligations that put webcasters at a severe disadvantage to other forms of radio -- and calls on Congress to fix it.

The highly-regarded Brookings Institution last week published "Digital Music Broadcast Royalties: The Case for a Level Playing Field" in which it calls for Congress to enact legislation requiring the use of a consistent legal standard for royalties when it comes to "all non-interactive digital audio broadcasting."

We've often discussed (such as here) -- as have leading experts in the field, such as attorney David Oxenford -- the fact that sound recording performance royalties for Internet radio are determined using a significantly different (and, as it's been demonstrated, dramatically unfavorable) legal standard than those for other forms of radio. 

The bottom-line result of the different legal standard can be seen in recent Copyright Royalty Board determinations. For instance, the CRB, based on the widely-used "801(b)(1)" standard in copyright law, "concluded in a December 2007 ruling that the satellite radio royalty rates should start at 6% of gross revenue for 2006, rising gradually to 8% in 2012." The same group of judges, using the significantly different "willing buyer/willing seller" standard (instead of 801(b)(1)), determined a royalty rate for Internet radio of $.0021 "per performance" (songs x listeners) for 2012. Pandora, had it been paying this rate instead of its special discounted agreement rate with SoundExchange, "its payments to SoundExchange for sound recording performance licenses would likely have... approach(ed) or exceed(ed) its revenue of $80.1 million."

The Brookings paper is an excellent primer on the differences between U.S. Copyright Law's "801(b)(1)" standard (used for rate-setting for satellite radio and services like Music Choice) and the "willing buyer/willing seller" standard that 1998's Digital Millennium Copyright Act mandated for webcasting. It also very nicely recounts the history of webcasting royalties, CARP and CRB, the DMCA, and more. The author, Brookings nonresident senior fellow John Villasenor, has published articles in Forbes (covered in RAIN here and here) on this very topic.

Brookings has at least one ally in Congress already. In July we reported (here) that Utah Republican Congressman Jason Chaffetz has begun crafting a bill that would indeed replace the "willing buyer/willing seller" standard in webcast royalty determinations with the 801(b)(1) standard.

Download the Brookings paper here. Billboard.biz has also covered this story here.

Paul Maloney
August 15, 2012 - 1:30pm

Berlin-based Goldmedia Group says its study shows the use of online radio on mobile devices in Germany is seeing particularly strong growth, and that one of every six "hits" to online radio services comes from smartphones or tablets.

The Bavarian Regulatory Authority for Commercial Broadcasting (BLM) and strategy consultant Goldmedia have published Web Radio Monitor 2012, based upon data collected via a survey of all online radio providers in Germany from May to June of 2012.

Goldmedia says, "Three quarters of the respondents regard mobile online radio as their central method of broadcasting... Mobile hits, via apps or mobile browsers, now make up 17% of all hits, compared to 14% in 2011. By 2014, mobile devices are expected to make up a quarter (24%) of all online radio hits. In addition, providers have high expectations for online radio streaming in cars. According to 87% of providers, usage in the car is expected to increase dramatically."

The study indicates that in April, listeners launched an average of 13,800 streams per station every day, a 36% increase compared to April 2011 (there are apparently about 3,000 online stations in Germany, with about 82% of them being "online only"). The services of the FM brands (simulcast streams and online sub-brands) reported an increase of 58%.

RAIN will visit Berlin for RAIN Summit Europe, October 5th. We've assembled a roster of fantastic industry leaders to speak (like our keynoter, GM/Europe & VP/Ad Sales for Spotify Jonathan Forster, not to mention experts from Germany representing firms like BMW, NRJ International, pilot, cjlea.com, RMS.de, and RTL Radio), and we can't wait to learn more from our European colleagues (and perhaps forge some new business relationships!). And just look at that gorgeous nhow "Berlin" - The Music & Lifestyle Hotel Berlin, where we'll meet. Please see all the details for RAIN Summit Europe (including registration) here. Read more from Goldmedia here.

Paul Maloney
August 15, 2012 - 1:30pm

Internet radio ad network TargetSpot today released the results of a study on Hispanic and African American audiences and their interaction with online digital audio (such as Internet radio).

Conducted by Parks Associates, the study reveals African American and Hispanic "digital audio listeners" are "more mobile and connected than the general population" with higher listening rates via tablets, mobile phones, and in-car digital solutions than the general population.

Additionally, digital audio listening "among both African Americans and Hispanics has surpassed broadcast radio listening both at home and at work," TargetSpot reports. "Both of these audiences are even more engaged in social media while listening than the general population, with 63% of African Americans and 70% of Hispanics visiting social networking sites while listening, compared to 60% of the general population," and advertising recall and response rates for these groups also exceed those of the general population.

Read more from TargetSpot's Multicultural Digital Audio Studies here.

Paul Maloney
August 15, 2012 - 1:30pm

The Canadian Radio-Television and Telecommunications Commission (CRTC) has decided it's not competitively unfair to private operators for the publicly-funded CBC to have launched the CBC Music portal.

In February (RAIN coverage here), Canada's national broadcaster launched the CBC Music service, with CBC FM streams, 40 Internet-only radio streams, on-demand music, and other audio content. Since then, private broadcasters like Stingray Digital (which operates cable television music service Galaxie and Stingray-music.com) have argued public funding and supposed preferential royalty rates gave CBC an unfair advantage in the field (see more in our coverage here).

The CRTC ruled, "SDG has not demonstrated that the CBC has given anyone, including itself, a preference, or that it has subjected anyone to a disadvantage." Read more from CBC here.