Radio lobbies against royalties, labels counter with ad, nothing changes for webcasters

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Issue Date: 
Mar 6 2013 - 1:10pm

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Lawmakers have made it pretty clear they don't want to hear about webcasting royalties any more -- including the Internet Radio Fairness Act -- before they deal with sound recording royalties for broadcast radio.

Inside Radio reports some radio executives are using the occasion of a conference in D.C. to visit with members of Congress and ask support for the "Local Radio Freedom Act." The non-binding resolution opposes any measure requiring U.S. broadcasters to pay sound recording performance rights (more from RAIN here).

Meanwhile, the record industry group musicFIRST Coalition answered with an ad in Politico (that's the image, full-size here), accusing broadcast radio of being "stuck in the past" (since other forms of radio like satellite, cable, and webcasters pay).

While the record industry publicly cites Internet radio as a paying customer for its copyright licenses, its representatives remain adamantly against measures that would likely bring webcast royalty rates in line with those paid by satellite and cable radio. The IRFA (more here) would require judges to use the same legal standard to determine statutory rates for streaming radio that they use for satellite and cable.

While satellite and cable radio royalty rates are determined using a legal standard known as 801(b), the 1998 Digital Millennium Copyright Act requires Internet radio rates be set using a different standard known as "willing buyer and willing seller." Unlike 801(b), "willing buyer and willing seller" ignores the "real world" ramifications of a rate determination, and all notions of fairness and minimizing industry disruption -- considerations of the 801(b) standard.

So while satellite radio pays about 9% of its revenue to license copyright sound recordings, leading webcaster Pandora pays well over half.

A late-November House Judiciary subcommittee hearing on the IRFA quickly lost focus on the bill as record industry witnesses (and the committee members sympathetic to them) steered the discussion to the AM/FM exemption (our coverage here).

Writing in Huffington Post, musician David Fagin blames the AM/FM exemption for lack of progress on webcasting issues: "Congress is scared to go after big radio and their lobby, and the RIAA is 'just fine' with the status quo. In the meantime, both sides have decided to just kick each other's asses, instead." (More in RAIN here).

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