TELECOM Digest OnLine - Sorted: Re: Web Radio Stations Set for "Day of Silence" Protest

Re: Web Radio Stations Set for "Day of Silence" Protest

Neal McLain (
Thu, 28 Jun 2007 22:04:25 -0500 wrote:

> On Jun 25, 6:26 pm, Reuters News Wire <>
> wrote:

>> Web radio broadcasters across the United States were preparing
>> for a 'Day of Silence' on June 26 to protest the U.S. government's
>> plans to boost royalty payments to artists and record companies
>> by more than 300 percent, when their music is played online.

> I read this and the other related post but I do not understand the
> situation.

> I presume the determination of royalties is a private issue
> set by contract between artist and user. I would be very surprised
> if the copyright law or some US Government agency determines the
> amount of the royalty.

> Is that a US Government agency? Sounds more like a private sector
> cooperative arrangement.

It's administered by the United States Copyright Office, a branch of
the Library of Congress. The procedure is defined by statute, and the
fees are not subject to free-market negotiation. The copyright office
also administers several other copyright arrangements, including
jukeboxes, cable TV (broadcast station retransmission), and satellite
TV (broadcast station retransmission).

Ever since the Copyright Act of 1976 was enacted (or possibly even
before that), the procedure has worked like this:

- The Copyright Office collects copyright royalties, and
disburses them to "claimants" -- musicians, authors, PBS,
composers, producers, program suppliers, sports interests,
and others who claim a piece of the pie.

- Some ostensibly independent agency determines the dollar
amounts to be collected, and the dollar amounts to be
dispersed. In 1976, it was an agency called the
"Copyright Royalty Tribunal"; the Clinton Administration
replaced it with ad-hoc tribunals called "Copyright
Arbitration Royalty Panels"; the latest iteration is
called the "Copyright Royalty Board."

For more info about the CRT and CARPs, see my post "Cable TV
Copyright" at .

> I must admit I am suspicious of webcasters and other new technology
> advocates. IMHO they seek benefits and protections of govt regulation
> but none of the obligations. In this particular instance, it seems
> they want the freedom to broadcast but are they willing to accept the
> restrictions that more traditional broadcasters are required to
> comply with?

Traditional broadcasters' over-the-air signals are indeed subject to
lots of regulations, but a government-defined copyright royalty
payment scheme is not among them. Broadcasters (or their networks)
license programming on the open market, and copyright royalties are
covered in these agreements. Music-licensing outfits like ASCAP and
BMI may administer blanket agreements, but such agreements are still
subject to free-market negotiation.

By contrast, webcasters' royalty fees are determined by the Copyright
Royalty Board. These fees apply even to simulcast webcasts provided
by broadcast stations. This, of course, was the underlying reason for
last year's flap over WFMT's webcasts: because of a previous round of
fee increases, WMFT had found it impossible to continue webcasting its
signal at no charge. After the new fees went into effect, WFMT
dropped its webcast altogether, then reinstated it with a $60/year
charge to cover copyright.

So I think your question "are they [webcasters] willing to accept the
restrictions that more traditional broadcasters are required to comply
with?" misses the point. Traditional-broadcaster-restrictions simply
don't apply to internet streams. Webcasters are subject to
government-imposed royalties that affect *all* webcasters, including
webcasts by traditional broadcasters.

The rates in effect before the recent round of increases were fairly

- Non-broadcast webcasters: $0.0007 per "performance" per
listener. That may not sound like much, but it adds up over
the course of a year. A hypothetical example: a listener
listens to a webcast for four hours per day for a year,
during which the webcaster plays ten songs per hour. This
yields a royalty fee of $0.0007 * 4 * 10* 365 = $10.22 per
year. Add to that the cost of internet access and the cost
of keeping track, on a minute-by-minute basis, of how many
listeners were connected, and how many songs each listener
listened to, and the cost to the webcaster can easily reach
$30 to $40/listener/year.

- Commercial broadcast stations (webcasts by broadcast stations
holding commercial broadcast licenses) incur the same fees as
non-broadcast webcasters. WFMT falls into this category: it
holds a commercial broadcast license even though it's owned
by a non-profit corporation. WNIB would also fall into this
category if it still existed.

- Non-commercial broadcast stations (webcasts by broadcast stations
holding non-commercial educational broadcast licenses) incur
a flat annual fee substantially lower than the commercial rates
listed above. WCPE and KOSU/KOSN fall into this category.

The rates contemplated by the pending rate increase are far more
complicated, so I won't try to explain them here. KCBX-FM, San Luis
Obispo, has a good explanation on its website:

Neal McLain

[TELECOM Digest Editor's Note: One thing I have heard stressed over
and over has been that the people who issue the licenses want the
webcasters to pay _back-dated_ to January 1, 2006 (all the fees you
discuss.) And many of the webcasters are saying that either they
will not pay at all, OR they will greatly fudge on their record
keeping (and frankly, I suspect many of them do not have nearly the
volume of listeners they claim to have when 'other listeners' are the
reason for their speech); and some have claimed they would relocate
themselves (or at least their internet signals) outside of USA
jurisdiction. How true any of that is, I do not know, but I strongly
suspect by later this summer, we will have a lot more 'pirate'
webcasters than we have now. PAT]

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