DiMA Joins Fight Against Webcast Royalty Ruling
March 20, 2007 at 10:46 AM (PT)
Just as NATIONAL PUBLIC RADIO and CLEAR CHANNEL did yesterday (NET NEWS 3/20), the DIGITAL MEDIA ASSOCIATION (DiMA) has asked the COPYRIGHT ROYALTY BOARD to reconsider issues related to its MARCH 2 determination of Internet radio royalty rates. DiMA Exec. Director JONATHAN POTTER said, "We do not believe that the COPYRIGHT ROYALTY BOARD intended to shut down the vast majority of legitimate online radio services immediately when it issued its decision, yet that is the sober reality facing many services. We hope that the judges will rehear these issues as they will have a particularly negative and immediate impact on our industry."
We do not believe that the Copyright Royalty Board intended to shut down the vast majority of legitimate online radio services immediately when it issued its decision, yet that is the sober reality facing many services.
DiMA wants the CRB to reconsider three issues:
1) Clarify the $500 "per station"/"per channel" minimum royalty. It explains, "Some DiMA members' Internet radio services offer users more than 100,000 specialized programming options. These include 'artist-based' programming that reflect a playlist the service believes will be enjoyed by fans of a certain artist; 'consumer-influenced' programming that reflect listeners' musical tastes; or aggregations of hobbyists or semi-professional DJs who create stations on a broader service, such as LIVE365, that in turn provides a single, aggregated report of use to SOUNDEXCHANGE.
"To the extent the judges' minimum fee per service is uncapped and extends to all these programming options, the minimum fee (which the judges intended to be a modest fee to cover SOUNDEXCHANGE administrative costs) will greatly exceed the total royalties that many services would otherwise owe. For example, LIVE365’s minimum fee will be more than three times higher than its 2007 royalty obligation (under the new rates). Some specialized programming services will have minimum fees that exceed $50 million.
"DiMA presumes that the judges did not intend the minimum fee to have such Draconian impact, and we are hopeful that judges will reconsider the fee to impose a per-service cap, as has previously been agreed to by SOUNDEXCHANGE and DiMA."
2) Include an Aggregate Tuning Hour (ATH) royalty calculation alternative. DiMA adds, "Previous royalty agreements have enabled services to pay royalties 'per-performance' (i.e., by counting each performance of each song to each listener) or 'per tuning hour' (i.e., by measuring the total hours that consumers were listening to the service). Most webcasters, and all broadcaster simulcasters, chose to measure aggregate tuning hours and pay royalties on that basis.
"The judges' recent determination is effective retroactively, to JANUARY 1, 2006, and does not explicitly permit payments 'by tuning hour.' However, most Internet radio services have not been maintaining precise performance data, and for those who can reconfigure their system to do so that effort will require several months. Accordingly, DiMA requests that the Board confirm a reasonably calculated 'tuning hour' royalty alternative permanently, or at least for the retroactive period and for several months in the future, e.g., until JANUARY 2008."
3) Reconsider the validity of the RIAA/SOUNDEXCHANGE expert's proposal. DiMA says, "In its Internet radio decision the judges based their royalty rate determination entirely on the expert testimony presented by SOUNDEXCHANGE witness MICHAEL PELCOVITS, who suggested that the right way to price non-interactive DMCA-compliant radio royalties is to calculate downward from the royalties paid by interactive non-DMCA compliant on-demand music services. In a concurrent case, regarding royalties to be paid by XM and SIRIUS, another SOUNDEXCHANGE witness proposed an entirely different methodology for calculating non-interactive DMCA-compliant radio royalties.
"If the second expert's theory had been applied in the Internet radio proceeding, the conclusions would have led to far lower royalties being set for Internet radio. This gamesmanship by SOUNDEXCHANGE suggests that the judges' reliance on the SOUNDEXCHANGE's expert to set Internet radio royalties was erroneous and should be reconsidered at this rehearing stage."