Today’s Wall Street Journal takes a look at the Copyright Royalty Board’s recent proposal to increase the amount of royalty rates for online radio stations. If the hikes are put into effect, they could force sites such as Pandora.com and Accuradio to shell out thousands of dollars in royalty payments–or worse, put them out of business altogether. So who’s to blame here?
Net-radio fans are angry, but they shouldn’t be too hasty in blasting the Copyright Royalty Board. The real problem is a pair of misguided decisions made by Congress in the 1990s…
A brief recap: The Digital Millennium Copyright Act of 1998, building on 1995′s Digital Performance Rights in Sounds Recordings Act, said Net-radio firms had to pay performance royalties on songs played in addition to composer royalties on those songs. Terrestrial radio stations pay composer royalties, but they don’t pay performance royalties, under the long-established rationale that record labels benefit from the promotional value of songs played on the radio.
So if a Clear Channel radio station plays that new Fergie song over the air, it doesn’t pay a performance royalty — but if it streams Fergie over the Net (or satellite radio), it does. Make sense to you?
To be honest, playing a Fergie song in any format–whether it be net radio, terrestrial radio or Cuba Gooding Jr. from Radio–never makes much sense to us. But the DMCA decision seems especially unfair: It’s been nearly a decade since the act went through Congress, and internet broadcasters have since grown to benefit record labels in ways greater than anyone could have imagined. Hopefully, someone will step in and help the Webcasters with their appeals–does anyone know what John Hall‘s up to this week?
Anxious Times for Net Radio [WSJ.com]