royalty rates

Bill would potentially raise satellite, cable and AM/FM streaming royalty rates

Tuesday, August 21, 2012 - 1:00pm

Rep. Jarrold NadlerA new draft bill from U.S. Representative Jerrold Nadler (D-NY; pictured) aims to raise AM/FM streaming royalty rates, in effect implementing an over-the-air performance royalty. It would also potentially raise royalty rates for satellite and cable radio to the same levels as those for Internet radio.

Nadler's bill, dubbed the Interim FIRST Act and currently in "discussion draft" form, would "put cable and satellite radio services on the same royalty-setting standard as Internet radio," reports The Hill. That would mean switching cable and sallelite from the 801(b) standard, to the "willing buyer/willing seller" model currently used to determine web radio royalty rates.

Additionally, the Interim FIRST Act would "make traditional radio stations pay a higher fee for live-streaming their broadcast online." Nadler intends for this extra free to "make up for broadcasters not paying a fee when they play artists' songs over the air," writes The Hill.

Quote from Rep. NadlerThat extra fee would wind up being what the Copyright Royalty Board decides "most clearly represents the royalty that would have been negotiated in the marketplace between a willing buyer and a willing seller for the public performance of sound recordings by means of over-the-air non-subscription broadcast transmissions by affiliated terrestrial broadcast radio stations," reads Nadler's draft bill (Section 3).

Technically, it's not royalty on over-the-air radio. But it amounts to paying a royalty for over-the-air (plus the streaming royalty) if a station also chooses to stream.

An over-the-air performance royalty appears to be the overall goal here. Comments from the musicFIRST Coalition seem to explain the Interim FIRST Act's name: "The only real solution is for Congress to create a legal performance right, but raising terrestrial radio’s digital royalties is an important interim step towards that goal." Said Nadler in a statement: "The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists."

As for changing the standard for satellite and radio platforms from 801(b) to "willing buyer/willing seller," how much of a difference will that really make? While we'd have to wait for a determination from the Copyright Royalty Board to definitively answer that question, consider this: satellite radio operator SiriusXM pays around 8% of its revenues for the right to use copyright sound recordings in its broadcasts, based on a determination using the 801(b) standard. Pandora, on the other hand, says nearly 70% of its total revenue (based on its Q1 FY 2013) will go to royalty payments (and that's based on on a deal Pandora struck that actually decreased its obligation from the CRB decision -- a decision based on "willing buyer/willing seller").

In July, we reported on (here) separate in-progress legislation from Rep. Jason Chaffetz (R-UT). That bill also aimed to bring more equality to radio royalty rates, but did so by potentially lowering web radio rates by determing streaming rates using the 801(b) standard.

Nadler says Chaffetz's bill -- which has Pandora's support -- could potentially "hurt performing artists." Not surprisingly, the musicFIRST Coalition has voiced support for the draft bill while the NAB opposes it.

You can find the discussion draft version of Nadler's bill here (PDF). The Hill has more coverage here.

In HuffPost guest column, Pandora's Westergren calls for "technology-neutral solution" to "absurd" royalty situation

Friday, August 3, 2012 - 1:10pm

Tim Westergren"It may surprise Americans to learn that the form of radio they listen to has profound implications for how much the artists who perform the music get paid," writes Pandora founder Tim Westergren in a new editorial for the Huffington Post. He goes on to point out the "absurd" difference in the rates webcasters, SiriusXM and AM/FM broadcasters pay to performers.

The answer, argues Westergren, is "a technology-neutral solution that assures fair compensation to artists while encouraging new voices and new technologies. Legislation that establishes a fair royalty rate setting standard for Internet radio will drive investment in webcasting, which ultimately means greater revenue and greater opportunity for working artists." 

You can find Westergren's full article in the Huffington Post here.

David Carson explains Copyright Office's roles and stances on copyright issues impacting radio

Wednesday, May 9, 2012 - 12:10pm

David Carson at RAIN Summit West 2012"We're nothing to be afraid of," chuckled David Carson, General Counsel of the U.S. Copyright Office, during RAIN Summit West 2012. Carson was interviewed on-stage by industry attorney and Davis Wright Tremaine partner David Oxenford. "Are you to be feared?" Oxenford had asked, on behalf of the webcasters and broadcasters in the audience.

Carson insisted the answer is "no." In fact, he said the Copyright Office has "hardly anything to do with" what is perhaps the biggest copyright-related sore spot among webcasters: setting royalty rates. That job is mainly handled by the Copyright Royalty Board.

However, Carson (pictured) did explain that the Copyright Office can review the CRB's decisions for "legal error," and any corrections can become legal precedents in the future. The CRB can also consult the Copyright Office about legal questions, and the Copyright Office makes recommendations about who should serve as a judge on the CRB.

In fact, Carson was part of a panel that just recently recommended the new CRB judge, Suzanne Barnett (RAIN coverage here).

The Copyright Office does take stances on copyright issues, though, and makes recommendations to Congress. One such issue -- "the most glaring," in Caron's opinion -- is the broadcast radio performance royalty. Carson said that since before 1978, the Copyright Office has "taken the position that sound recordings should be entitled to a performance royalty just like musical compositions are... We are one of the few countries on earth that doesn't actually provide a performance royalty for sound recordings [played on AM/FM broadcast radio]." (Internet and satellite radio in the U.S. do pay performance royalties.)

To the Copyright Office, explained Carson, broadcast radio's performance royalty exemption "seems sort of bizarre" and "strange."

Oxenford questioned Carson about whether the Copyright Office has, or should, consult broadcasters about that stance. "That's what Congress does," answered Carson. "We advise Congress." And while sometimes Congress requests the Copyright Office to conduct studies and discuss the matter with stakeholders, more commonly "we're actually directed not to talk to stakeholders. 'We want your expert advice,' [instructs Congress]... and as often as not they thank us for our recommendations and then go off and do something else."

All that said, "we can expect no copyright legislation this year," predicted Carson, thanks in part to the election.

Carson also discussed the situation on pre-1972 sound recordings, and offered his thoughts on the recent SOPA debacle (when "suddenly politics wasn't played by the usual rules").

You can watch the entire interview with David Carson thanks to RTTNews here.

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