Wednesday, Librarian of Congress James Billington rejected CARP's recommendations regarding webcasting song royalties. The Copyright Arbitration Royalty Panel (CARP), appointed by the Copyright Office after the RIAA and webcasters failed to reach an agreement regarding webcasting royalties, issued its recommendations on February 20, 2002. Although both sides opposed CARP's recommendations, they did so for different reasons. Webcasters complained the unreasonably steep royalties would put them out of business, while the RIAA demanded an even bigger share of the stations' revenues. Billington, meanwhile, must accept a fee schedule by June 20, 2002.

CARP and its findings are a result of regulations set forth in the Digital Millennium Copyright Act (DMCA) of 1998, a poorly written piece of legislature that, amongst other things, stipulates webcaster radio stations pay a royalty to the record companies and performers of songs, per listener of the station. Regular broadcast radio stations, on the other hand, must pay a royalty to songwriters, which amounts to approximately 3% of a station's total revenue, according to ASCAP, BMI, and SESAC. This additional royalty, to be funneled through an organization called SoundExchange, provokes some immediate concerns. Do unsigned artists get paid and if so, how? (Consider that no independent artist has seen a penny from the royalty pool created by the manufacturers of blank tapes and recording devices from the 1992 Audio Home Recording Act). Also ask, if Congress had heretofore determined that record companies received promotional benefits from on-air broadcasting that precluded receiving monetary compensation, so Record companies and webcasters were given an opportunity to negotiate an agreement following the passage of the DMCA, but that seemed an impossibility when the labels were asking for 15% of total revenues and the webcasters offered something closer to the already established 3% given to composers. Thus, CARP was created and a series of hearings, not open to the public, were held last summer and fall to determine an appropriate rate. Not surprisingly, those representing copyright owners were all represented by the RIAA and the webcasters were all large conglomerates like AOL and Clearchannel, not the hundreds of independent broadcasters that were most harshly affected by the rulings.

The February 2002 recommendations set the royalty at .14 cents (that's $.0014) per song per listener for Internet only webcasters, .07 cents ($.0007) per song per commercial radio simulcasts, and .02 cents ($.0002) per song for noncommercial simulcasts, retroactive to October 1998. Thus, an Internet only broadcaster that streams one hour/15 songs to 1000 listeners would owe $21 in royalties (.0014 x 15 x 1000 = $21.00). That's $21 per hour, and only if 1000 people are tuning in. Meanwhile, nationally broadcast radio has an average audience of 40,000,000 (Mon-Sun, 6a-12a). Assuming 75% of those listeners are tuning into music and not news or talk radio, at 18 hours per day, 365 days per year and 12 songs per hour, that amounts to 2.365 trillion songs per year. (This doesn't count overnights). At the rate CARP is recommending for web-broadcasters, that would mean the RIAA would be owed an additional $3.3 Billion per year!

Webcasting is in its infancy, and with the exception of big conglomerates, generates little interest from advertisers. However, it is important to remember that many webcast formats are not currently available on regular broadcast radio (classical, trance/electronica, world music, Americana, various forms of jazz), and one of the last bastions for independent artists to be heard. Also, according to Arbitron and Measurecast, the number of webcast listeners is growing by more than 100% per year. The RIAA perceives webcasting as a threat to the near death-grip they currently hold on today's popular music market.

So, if you've ever listened to webradio, are a musician who hopes to benefit from the outlet webradio affords, or just bristle at the idea of the "Big 5" record companies controlling yet another avenue of musical choice, contact the Copyright Office and voice your opposition and concerns, as well as your local papers and media.Tell your Representative or Senator to reconsider the DMCA, as well as strike down the newly introduced Hollings Bill or CBDTPA (Consumer Broadcast and Digital Television Promotion Act), which will essentially end all forms of digital media and eradicate the concept of fair use, while treating every consumer as a possible criminal.

The Copyright Office can be reached via copyinfo@loc.gov
Find your Congressperson: http://congress.org/
Find newspapers: http://newslink.org
Or if you're too busy to compose a letter yourself, they'll do it for you: www.anti-dmca.org (just click on the "Save Internet Radio" banner)

Submit your comments to the Senate Judiciary Committee on CBDTPA here: http://judiciary.senate.gov/special/input_form.cfm?comments=1
Send an automatic fax to Congress protesting the CBDTPA: http://www.digitalconsumer.org/cbdtpa/cbdtpa-inf.html

The following sample letter is being duplicated compliments of www.musicianslobby.com:

Dear -------,

As a musician and copyright owner, I fully support the rights of parties to protect their intellectual property. However, royalty rates currently proposed for Internet webcasting will have a negative and injurious effect on my ability to make a living.

Due to provisions in the Digital Millennium Copyright Act and other recently enacted laws governing digital music, licensing fees have been proposed that will drive independent businesses out, while paving the way for large, corporate broadcasters to monopolize the Internet airwaves. This will have a negative effect on both artists and fans, and decrease the amount of choices available on Internet radio.

I am an independent musician, which means I am not signed to a major record label, and instead operate as a small business. Crucial to the success of my business is the ability to receive radio and web broadcasts of my music. If I cannot get my product to the market through air play, my business may not survive.

It has become harder and harder for independent musicians to receive this crucial air play in the last several years due to massive consolidation in the broadcast industry, and the proposed webcasting royalty rates will future complicate this problem.

Because of budgetary concerns, independent musicians typically receive air play only from independent broadcast sources that are willing to experiment with "unknown" music. These broadcast outlets, both non-commercial/college radio and Internet webcast sites, are most often small micro-businesses - the very businesses that will not be able to afford the proposed webcasting rates. Additionally, the reporting requirements will be beyond the abilities of the small broadcasters, both technically and financially.

The proposed rates are likely to drive many small broadcasters out of business, while only large broadcasters will be able to afford the webcasting royalty fees.

The negative effects of this situation are difficult to overestimate for the small business musician, and should also concern music fans. These proposed royalty rates need to be reformed before they become law.

Sincerely,
Your Name
Your Address
Your City, State, Zip