July 12, 2007 6:51 AM PDT
Court rejects OUR plea for NET RADIO relief!
A federal appeals court has declined to grant a petition by Webcasters to delay the onset of new royalty fees that they argue could imperil their offerings.
In a one-page order filed late Wednesday, the U.S. Court of Appeals for the District of Columbia said the opponents of the fees “have not satisfied the stringent standards required for a stay pending court review” and rejected their request for an emergency stay.
Barring an 11th-hour agreement, then, between Internet radio operators and the music industry, the new fees are scheduled to kick in on Sunday.
Jonathan Potter, executive director of the Digital Media Association, whose members include larger Internet radio operators like Yahoo, Live365, Pandora and RealNetworks, said he was hopeful Webcasters could still reach a compromise with the music industry.
But until then, Webcasters will be “forced to make very difficult decisions about what music, if any, they are able to offer,” he said in a statement. “The result will certainly be fewer outlets for independent music, less diversity on the Internet airwaves, and far fewer listening choices for consumers.”
The new rules (PDF) issued by the U.S. Copyright Royalty Board earlier this year prescribe rate hikes of 0.08 cent per song per listener retroactive to 2006. They would also climb to 0.19 cent per song by 2010. According to the advocacy group SaveNetRadio, smaller Webcasters could face payment increases of up to 1,200 percent of what they owed before, while larger ones could owe up to 300 percent more.
Each station would also have to hand over a minimum $500 royalty payment per “channel” under the ruling, which DiMA says could cost the three largest Net radio operators–Yahoo, RealNetworks and Pandora–more than $1 billion in the first year alone.
SoundExchange, the nonprofit entity that collects the fees, was not immediately available for comment on the decision Thursday.
The group has offered two attempted compromises to the Net radio industry, but they haven’t gone far enough to meet the Webcasters’ wishes thus far. First, it attempted to extend a peace offering to smaller Webcasters by saying it would freeze through 2010 the “below-market” rates they have been paying since 1998. But Net radio advocates said that would effectively discourage smaller firms from growing their operations. More recently, the group also reportedly to cap at $2,500 the $500 per “channel” minimum fee for all Webcasters but, according to DiMA, only through 2008.
If an accord can’t be reached, Congress may need to step in and pass a bill that would overturn the CRB’s ruling, said Rep. Jay Inslee (D-Wash.), one of the sponsors of the House of Representatives version. His bill proposes leveling the royalty rates for all digital broadcasters–satellite, cable and Internet–at 7.5 percent of their revenues.
“I hope a compromise between online radio broadcasters and record labels can be reached before then, but if the hammer drops, urgency for congressional action only increases,” he said.