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CRB Update
Headline: "DC Appeals Court sets schedule for briefs in webcasting case"
From David Oxenford in Broadcast Law Blog: "The U.S. Court of Appeals for the District of Columbia has set the briefing dates on the appeal filed by various webcasting groups [see RAIN coverage here] seeking review of the decision of the Copyright Royalty Board setting Internet radio royalties for the period 2006-2010 for the use of sound recordings [RAIN coverage here].

[Broadcast Law Blog's archived coverage of this controversy is here, and a detailed summary of the CRB decision here].

"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...

"Already, 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 issues.


Headline: "Simson: Radio royalty would encourage newer artist airplay"
From the "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], SoundExchange 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...

[AA:] "NAB 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 radio...

"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) will get
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 coverage here]. Why should the latter pay more than cable radio?

[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 -- 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. We're used to getting 70% from iTunes... Napster and Rhapsody, 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.

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