subcommittee

Recording Academy head hails end of 112th Congress as Fairness Act defeat

Thursday, January 3, 2013 - 12:45pm

Recording Academy president and CEO Neil Portnow sent the following e-mail to members today the conclusion of the 112th U.S. Congress, to which the Internet Radio Fairness Act was introduced. It should be easier to read here (and you can click on his links).

We've extensively covered the IRFA here. You can also see our coverage (and link to written witness testimony) of the House Judiciary Subcommittee that met on this matter in November (to which Portnow refers) here and here.

Could AM/FM's royalty exemption doom webcasting's hope for relief?

Thursday, November 29, 2012 - 12:40pm

It was clear that many members of the House Judiciary subcommittee weren't interested in hearing about Internet radio's problems during yesterday's hearing (see our coverage here).

[SomaFM's Rusty Hodge has posted audio of the meeting online here. We should also point out that Tom Taylor has excellent and extensive coverage of the hearing in his Tom Taylor Now newsletter here, as does Inside Radio here.]

The meeting was to discuss the Internet Radio Fairness Act legislation intended to bring relief to an industry whose most successful representative remains unprofitable and paying more than 50% of its revenue in music rights. But music industry witnesses and their allies on the subcommittee deftly turned the spotlight elsewhere: the fact that broadcast radio does not have to pay royalties for sound recordings it plays on the air.

The maneuver perhaps revealed just how difficult it will be for IRFA-backers to gain any ground while the "radio royalty" issue remains unresolved in the eyes of the record industry.

In recapping yesterday's House Judiciary subcommittee hearing on the Internet Radio Fairness Act, ArsTechnica concluded:

"Overall, to say Pandora's battle appears to be an uphill one would be a serious understatement. Its main ally is the terrestrial radio industry, which has become a 'bad guy' to many in Congress. And the list of opponents is growing to include not just the entertainment industry but also unions and interest groups, both liberal and conservative... the AFL-CIO, the NAACP, Americans for Tax Reform, and the American Conservative Union all opposed the bill...

"In the meantime, the Internet radio industry—which essentially consists of just one large player—will continue to be a losing bet."

Read Ars Technica's recap (also the source of the boom box photo) here.

From today's early edition: Pandora CEO Kennedy, Hubbard CEO Reese, SoundExchange Pres. Huppe to speak on Capitol Hill

Wednesday, November 28, 2012 - 11:25am

The Internet Radio Fairness Act will get its first exposure in Congress today since its introduction, as the House Judiciary's Subcommittee on Intellectual Propery, Competition, and the Internet will hold a hearing called "Music Licensing Part One: Legislation in the 112th Congress" at 11:30am ET (10:30am CT). You can stream video here.  

IRFA backers contend the bill is necessary to allow Internet radio to more fairly compete against other forms of digital radio (more details here). Joseph Kennedy, Chairman/CEO of leading webcaster Pandora will speak in support of the bill, as will Hubbard Radio President/CEO Bruce Reese, who'll appear on behalf of the National Association of Broadcasters.

Former eMusic COO/CEO and Apple Music Group cofounder David Pakman will also appear. Pakman is now a partner at Internet and digital media investment firm Venrock, and writes the Disruption blog.

Critics of the IRFA say the bill would only result in lower payments to copyright owners and performers. Some support a draft of a bill called the Interim FIRST Act (more here), which may also be discussed in the hearing. Representing copyright owners and the music industry will be producer, songwriter, and recording artist Jimmy Jam (who's also The Recording Academy Chair Emeritus). He'll be joined by SoundExchange president Michael Huppe. Also speaking will be economist Dr. Jeffrey Eisenach, Managing Director/Principal of Navigant Economics.

To get the most out of today's hearing, it may help to have a handle on a couple key concepts:

801(b): That's the section of the Copyright Act (you can read it here) that sets out four important criteria Copyright Judges are required to follow when they decide royalty rates. Paraphrasing, they are:

  • Maximize the availability of creative works to the public;
  • Insure a fair return for copyright owners and a fair income for copyright users;
  • Reflect relative roles of capital investment, cost, and risk, and;
  • Minimize disruptive impact on the industries involved.

"Willing buyer willing seller": This is the standard upon which Internet radio royalties are currently based, as per the 1998 Digital Millennium Copyright Act. With that law, Congress decided the webcast royalty process should eliminate 801(b)'s concern for the public's access to creative works, minimizing disruption, and fairness -- and instead require judges to devise a rate solely on what they think reflects the "fair market value" of the licensed works. That is, what a hypothetical "buyer" would be willing to pay to a hypothetical "seller" (the "buyer" being the licensing service, the seller being the copyright owner) in a free market.

The Internet Radio Fairness Act: The focus of the bill is to move webcast royalty determinations from the "willing buyer willing seller" standard to 801(b), the standard used for determining the royalties paid by Internet radio's two most-similar competitors: satellite radio and cable television radio. (It also happens to be the standard used to determine what record labels pay for the use of copyright song compositions when manufacturing recordings.)

The Interim FIRST Act: Draft legislation that's main focus would be to make all three digital radio platforms (Internet, satellite, and cable radio) use the "willing buyer willing seller" standard in royalty determinations.

Performance royalty: One final note that what will (most likely) be discussed will be the royalties these services pay for the use of copyright sound recordings (as opposed to song compositions). The beneficiaries of this royalty are copyright owners (usually record companies), and recording artists and performers.

We'll have follow-up coverage and analysis of the hearing later today. Please check back.

House subcommittee to hold hearing on Net radio royalties

Monday, October 29, 2012 - 1:20pm

Inside Radio is reporting the House Judiciary Subcommittee on Intellectual Property, Competition, and the Internet will gather for a hearing on how Internet radio royalties are determined (there's no date or witness list yet).

Reforming the process for setting Internet radio royalties is at the heart of the Internet Radio Fairness Act (see RAIN here), recently introduced to both houses of Congress. The IRFA would require copyright judges to use the same "801(b)" standard in setting the royalty rates for Internet radio it uses for other forms of digital radio, like cable and satellite.

The House bill, H.R.6480, is co-sponsored by subcommittee members Jason Chaffetz (R-UT), Darrell Issa (R-CA), and Zoe Lofgren (D-CA). The subcommittee is chaired by Virginia Republican Bob Goodlatte.

Last week (in RAIN here) the Internet Radio Fairness Coalition, a group of interested webcasters, broadcasters, and technology groups, launched to support passage of the bill.

Syndicate content