Webcasters Will Have To Pay Up On Sunday

    July 12, 2007
    WebProNews Staff

It’s a sad day for small Internet radio stations, to be followed by a painful Sunday. The US Court of Appeals denied an emergency stay of execution requested by Webcasters to postpone royalty payment hikes implemented by the Copyright Royalty Board.

The reasoning sounds rather bureaucratic. The court said opponents of the CRB had "not satisfied the stringent standards required for a stay pending court review."

In other words, come Sunday, when the new retroactive rates kick in, a lot of Web radio stations are screwed. Independent music outlet SomaFM said the rates amounted to a 3000 percent increase in payout, and the fees are retroactive to January 2006.

Opponents had hoped the Court of Appeals would postpone the payment due date until Congress had a chance to pass legislation to nullify the rate hike.

Legislation is still on the table, and SomaFM is asking Independent music fans to call their legislators. This is what they’d like to see happen:

1. A reasonable rate. The previous rate of 10% of the first $250,000
of revenue and 12% of revenues in excess of $250,000 is regressive
and designed to hinder growth. As revenues increase, royalties should
decrease, just like any other quantity discount. We think the rate
should start at 10% for revenues under $2 million, 9% for revenues
between $2-5 million, and 8% for revenues over $5 million. These
rates are in line with the rates currently paid by satellite radio.

2. A sensible term. A settlement that last for just 2 years is
completely unacceptable. A suggested term would be through the end of
2010, with a right by either party to extend for another 3 years
after that.

3. Increased revenue caps. The RIAA defines small commercial
webcasters as entities with less than $1.25 million in annual
revenues. Exceeding this amount in a calendar year would disquality a
webcaster for paying based on a percentage of revenues, and force
them to pay on a per song, per listener basis which would be multiple
times their annual revenue. This cap needs to be raised if the
webcasting industry is to be allowed to grow. Revenue caps this low
will force small webcasters to constrain their growth or else face
debilitating royalty liabilities. We think this cap should be raised
to $10 million. The US Small Business Administration "Table of Small
Business Size Standards" defines a small traditional radio
broadcasting network as a company with less than $6.5 million in
annual revenue (and no limit to the number of employees). An internet
broadcasting service is considered a small business if they have less
than 500 employees and no revenue limits.

4. Common-sense reporting requirements. Broadcasters would be
required to report either the ISRC, or if not known, the Artist,
Track Title and Album Name.

5. Congressional "codification" of the settlement. Congress will need
to endorse this settlement and put it into law.