[Broadcast Law Blog's archived coverage of this controversy
and a detailed summary of the CRB
"The briefs of the various webcasting groups who appealed
are due on February 25. The
brief for the CRB (represented by the Department of Justice) is
due on April 25, and that of SoundExchange
(the 'Intervenor') will be filed on May 15. Reply briefs are due
on June 12, and oral arguments are yet to be scheduled. As the Court
usually takes a summer break in July and August, the argument is
likely to be held in the Fall of 2008, and a decision would likely
not come until very late in the year or,
more likely, in 2009.
"Appeals were filed by a number of groups
including large webcasters... the small commercial webcasters (who
I have represented), various noncommercial groups... and various
commercial broadcasters who also stream... Royalty
Logic, which is seeking to become a collective that is competitive
with SoundExchange, also filed an appeal...
there has been a settlement announced on one narrow aspect of
the case, the minimum fees for
companies that stream multiple channels, limiting the per company
minimum fee to $50,000. Obviously, if there are other settlements,
these appeals could become unnecessary in whole or in part. See
our summary of the remaining issues to be resolved here."
Taken from David Oxenford's blog entry here.
David Oxenford is a Washington, DC-based partner at the firm Davis
Wright Tremaine who represents Internet radio stations and other
webcasters on music licensing and other regulatory and transactional
From the AllAccess.com: "Two of the hottest issues facing
radio in 2007, both terrestrial and on the Internet, are the current
Internet streaming royalty negotiations and the proposed performance
royalty bill for terrestrial radio... Fresh off appearing before Congress...
[RAIN coverage here],
Executive Director John Simson
spoke exclusively to ALL ACCESS to offer the major labels' perspective
on both issues...
"This is about redistributing
the wealth from corporate radio" [AllAccess:] "Among the concerns expressed by the radio
side is that the money that radio would pay... could cause
the cutback or elimination of
local programming, news gathering and promotions. There are those
who say that the less-profitable music stations would be forced to
flip to a more profitable non-music format.
[John Simson:] "If you look at radio, it's more
profitable than pharmaceutical companies and oil companies,
and stations still sell for a lot more money than the original owners
paid for them. It's a $20 billion a year industry, so we don't buy
that argument at all. Certainly we want to make accommodations for
small mom-and-pop stations...
"Perhaps what will happen is that this will get radio
more engaged in playing newer and emerging
artists more often, instead of giving the majority if airplay
to established superstars. Record companies and new artists would
be more likely to make a deal,
something like 'We'd love you to play this record, so we'll give you
break on performance rates for the first 90 days [the record's] out.'..
In fact, I think a royalty would encourage innovation, they'll play
newer music and probably make deals...
counter-attack about labels not paying artists...
[JS:] "SoundExchange is run by a board of nine artists
and nine labels, and our job is to bargain for an equitable royalty
for performance rights. What happens to those performance rights
is up to the individual recording contract.
If the artists own the masters, they'll reap the benefits. If the
labels own the masters, the benefits are split... This is really about
redistributing the wealth from corporate
"Even when you look at the artists on the sale charts;
it's not like everyone on radio runs out and buys the records they
hear, or even goes to their concerts... What you have to recognize
is that radio play can be a substitute
for CD sales.
[AA:] "...Then why would the labels spend hundreds
of thousands of dollars on hiring people to work
their records to radio, and then spend many thousands more
on companies that track radio play?
[JS:] "I'm not saying that radio play doesn't sell records;
I am saying that a certain number of records played on the radio will
be sold regardless, and that the promotion of getting artists
airplay is universal. Radio play is one way to maximize sales of certain
records, which helps labels build market share, which is where
the real battle is... There are a lot of different reasons
why people buy records, and radio play is one reason that is becoming
less prevalent over time... "I think (webcasting royalties)
resolved on the negotiating table" [AA:] "You've recently concluded a deal with cable radio
for a royalty rate that you turned down for Net radio interests [RAIN
Why should the latter pay more than cable
[JS:] "There was a separate proceeding with cable radio
services, who are very specific, narrow group... Congress said they
should get a special rate, because we don't
want to interfere in the business of preexisting subscription
services... The money we would make from them would not be able to
pay for the litigation, so we settled to the rate that was put in
place back in 1998.
"However, the very same services
run by newer, different companies -- such as MTV.com
-- saw their rates double [RAIN coverage here].
Congress mandated that a panel of experts
should determine what rates should be taken into account.
Since the business models are fundamentally
different than each other, the rates should be different.
used to getting 70% from iTunes...
they pay 50% of their revenue...
[AA:] "Gut feeling -- Will this be negotiated or will
Congress have to come to the rescue?
[JS:] "I think it will get resolved
on the negotiating table... For radio and the Internet
broadcasters to now go back to Congress to propose their own rates
-- after Congress set this whole panel up to do just that -- goes
against all common sense, given the reason why the board
was set up in the first place... We're moving forward and I'm hopeful
for an amicable resolution."
The entire AllAccess interview with John Simson is online here.