CRB Denies Appeal. Net Broadcasters Unite To Fight Back.

UPDATED – In a major blow to internet radio, the Copyright Royalty Board (CRB) yesterday denied motions for a rehearing of their March 1, 2007 decision setting much higher performance royalty rates for Internet radio from 2006 to 2010.
The board also refused to delay implementation while the broadcasters pursue other avenues of appeal. (Read the full text of ruling here.)

The CRB wrote, "…none of the moving parties have made a sufficient showing of new evidence or clear error or manifest injustice that would warrant rehearing. To the contrary…most of the parties’ arguments in support of a rehearing or reconsideration merely restate arguments that were made or evidence that was presented during the proceeding."

Royalty collection organization Sound Exchange declared victory. But web broadcasters vowed to take their fight to congress, the courts and directly to artists and record labels. Meeting during NAB on Las Vegas broadcaster including AccuRadio, Live365, Pandora and others have formed a new coalition dubbed Save Internet Radio to fight the higher rates in the courts and Congress as well as by appealing to record labels and musicians.

"Under the judges’ decision, we owe $600,000 for 2006 — which is about 150% of our total revenues! That would absolutely bankrupt us and will force us to shut down." said Brendon Silver of popular AccuRadio.  "If these rates stand, and of course I hope they won’t, but if they do, I believe we’ll see a virtual shutdown all of U.S. webcasting. And that will be bad for listeners, webcasters, musicians, and the record industry alike."

A2IM estimated recently that internet radio plays four times more indie music than traditional FM.

Read Sound Exchange’s reaction in a press release after the jump.

FOR IMMEDIATE RELEASE:
APRIL 16, 2007

Judges Rule No Change In Music Royalty Rates

-Increased Fees From Internet Radio Upheld-

Washington, DC—The Copyright Royalty Board (CRB) today upheld its earlier decision on fair royalty rates to be paid to musical artists and record labels for the use of their work on Internet radio. The three judge panel denied motions by Internet radio operators for a rehearing of the Board’s March 1, 2007 decision setting performance royalty rates for Internet radio from 2006 to 2010.

The CRB wrote in its decision, "…none of the moving parties have made a sufficient showing of new evidence or clear error or manifest injustice that would warrant rehearing. To the contrary…most of the parties’ arguments in support of a rehearing or reconsideration merely restate arguments that were made or evidence that was presented during the proceeding."

SoundExchange Executive Director John Simson declared that this is a victory for performing artists and record labels who work long and hard to produce music for all to enjoy. "Our artists and labels look forward to working with the Internet Radio industry — large and small, commercial and non-commercial — so that together we can ensure it succeeds as a place where great music is available to music lovers of all genres,"said Simson

"AFTRA recording artists applaud the Copyright Royalty Board for upholding their decision on internet radio," said Kim Roberts Hedgpeth, National Executive Director of the American Federation of Television and Radio Artists (AFTRA). "They deserve to be paid fairly for the use of the creativity, talent, and hard work they put into making music. Internet radio is growing and successful because fans want to listen to the music created by artists. The CRB’s decision recognizes that, as these businesses grow, both featured and non-featured artists should be compensated at fair market rates for their contributions to the growth of these companies."

The CRB also wrote, "…it appears that all evidence discussed in the motions had either been discovered during the proceeding or could have been discovered during the proceeding, with reasonable diligence." Additionally, the CRB found: "In the absence of an adequate showing of new evidence, the parties’ arguments in their respective motions amount to nothing more than a rehash of the arguments that the Judges considered in the Initial Determination."

Michael Huppe, General Counsel of SoundExchange, in noting that SoundExchange is now looking forward to the next steps in the wake of the CRB ruling, said, "We are gratified that the CRB has upheld its decision. With the resolution of these motions, it is now time to move forward with business. It’s in everyone’s best interest to ensure a vibrant and thriving marketplace for Internet Radio and we intend to work with webcasters towards achieving that goal."

Additionally, the CRB denied the request of webcasters to stay implementation of the new royalty rates (2006-2010) until all legal appeals had been exhausted. In doing so, the CRB pointed to specific language established by Congress in the Copyright Act. The CRB wrote, "…Congress, not the Judges determined the effective dates for the royalty rates…" The CRB went on, "Moreover Congress determined that these rates would go into effect, notwithstanding any pending motions for rehearing.."
Barry Bergman, President of the Music Managers Forum-US aid, "For many artists a royalty check can mean the difference between continuing to create new and exciting music for a living, or allowing musical talents to be silenced. In recognizing the value musical artists bring to the success of Internet radio, the CRB has taken a necessary step in helping to ensure that many artists are able to continue using their special talents which are enjoyed by all."

The CRB also made two points of clarification regarding its Initial Decision. First, at the request of the webcasters, the CRB will allow them to use estimated ATH (Aggregate Tuning Hours) measures to determine audience listening for 2006 and 2007. However, the CRB said this is only for a transitional period, during which webcasters who have not yet implemented systems to track the music that they play will have the chance to do so.

Also, in response to SoundExchange’s request for clarification, regarding whether the Initial Decision covers webcasting services delivered over cellular networks, the CRB indicated it did.

Background
On March 2, 2007, the Copyright Royalty Board issued a fair and reasonable decision that sets compensation rates to be paid artists and record labels for the public performance of their works by Internet radio broadcasters from 2006-2010. The three judge panel heard testimony from dozens of witnesses and conducted a comprehensive review of tens of thousands of pages of evidence submitted by all interested parties over an 18-month period. The decision is a reflection of the need for artists to be fairly compensated for the performance of their work by webcasters who benefit–financially or otherwise–from their talents. As the music industry evolves from CD-only sales to multiple distribution platforms it is critical that creators of music share in revenues from all platforms.

SoundExchange is the first performance rights organization in the United States to collect and distribute digital audio transmission royalties to artists and sound recording copyright owners. SoundExchange represents over 2000 record companies and thousands of recording artists, and is seeking out more labels and artists who are owed royalties for sound recordings played on digital cable and satellite television music services, satellite radio services or streamed via non-interactive webcast. The non-profit organization is governed by a board of artist and label representatives. Services include track level accounting of performances to all members and collection and distribution of foreign royalties to all members. All artists, labels and/or their representatives are invited to visit www.soundexchange.com.

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For additional information on SoundExchange, please contact Diana D’Angelo at Shore Fire Media, 718.5227171/ddangelo@shorefire.com or Richard Ades and Gregg Perry at 202.640.5894/news@soundexchange.com.

Diana D’Angelo
Shore Fire Media
32 Court St.
Suite 1600
Brooklyn, NY 11201
718.522.7171 ext. 24
ddangelo@shorefire.com