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On 20 June 2002 the Librarian of Congress set a rate that Internet broadcasters would have pay to stream copyrighted music over the Internet, .07 of a cent per song per listener, or USD0.70 for every 1,000 listeners of a song. That decision was based in part on a previous resolution that related to Yahoo's streaming of Internet audio.
But many musicians and record companies claim that the Librarian's new rate is too low, while the broadcasters say the rate is too high.
"The Librarian's decision was based on a misguided reading of the record," said Hilary Rosen, chairman and chief executive officer of the Recording Industry Association of America (RIAA). "Not only was improper weight given to the testimony of Yahoo, but some 140 separate licensing deals were thrown out by the Librarian. The end result significantly undervalued the music used by Internet radio companies."
Those 140 deals include 25 licensing deals the RIAA stuck with other Webcasters, as well as 115 similar deals cut by individual record companies, which the organisation insists set fair market value for streamed music. And although the RIAA says it is unwilling to settle with the rate, it is worth noting that many record labels say the Librarian's rate is satisfactory.
Now, the RIAA, the American Federation of Recording and Television Artists and the American Federation of Musicians are appealing the Librarian's decision through the US court system in order to get higher rates installed.
But on the other side of the argument lies the Digital Media Association and the law firm Shaw Pittman, who are fighting on behalf of broadcasters to have the rate lowered, claiming that the USD0.70 figure will put many Web broadcasters out of business. Some reports claim that around 300 small Internet broadcasters have shut down since the USD0.70 rate was set, in anticipation of the large fees due to go into effect this September.
"I am hopeful that a negotiated resolution will enable the industry to withdraw this appeal, but there has been no indication that the RIAA or SoundExchange are seriously interested in royalty rates that will enable thousands of small Webcasters to survive, or that will enable music lovers to continue enjoying the diverse Internet radio experience that promotes myriad artists whose music is never performed on traditional radio," Jonathan Potter, executive director of the Digital Media Association, said in a statement.
Indeed, RIAA critics also note that although the recording industry struck deals with Internet broadcasters, many of these business have since gone under or never launched their Internet music services. Moreover, Internet broadcasters point out that traditional radio stations pay nothing to broadcast music over AM/FM frequencies. And many of these same radio stations are now lobbying to be exempt from the new rates.
There have been other moves afoot to settle the issue, including discussion by a Senate judiciary subcommittee. The issue is also dealt with in a new bill in Congress that would repeal the rate for small, independent Webcasters. Whether the issue is resolved through the courts or in Congress, few are optimistic that a resolution will surface quickly.
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