Business - Web Radio Royalty Battle Takes New Turn

The battle over radio royalty rates will likely continue into 2009, with the latest issue tackling how and when cable, satellite, and Internet stations should report their playlists to copyright holders in order to determine payment.


The Copyright Royalty Board, a government body that sets royalty rates, released a notice on Tuesday that suggests altering the reporting requirements for stations.


CRB wants any entity that pays royalties under sections 112 and 114 of the Copyright Act, including Internet radio, satellite radio, digital cable radio, and any other radio-like services delivered by digital means to report every single song they play on the air to SoundExchange, which governs the music industry's royalty rates. Under current rules established in 2004, they are only required to report their playlists for two weeks every quarter.


Pure Internet radio stations like Pandora will not really be affected by this type of "census reporting" because they already agreed last summer to report all activity electronically.


CRB also noted that satellite and cable could have difficulty actually calculating how many users are listening to a particular song, and might have to come up with an alternative means of payment.


"Where this change is likely to have the most impact is in connection with the operations of broadcasters who also stream their programs on the Internet," David Oxenford, a partner with Davis Wright Tremaine, wrote in a blog post. "Noncommercial broadcasters, such as college radio stations, have repeatedly complained that their small staffs to not have the ability to maintain these electronic records, especially where the stations are volunteer-programmed by DJs who select their own music on the spot."


Comments on this proposal are due to the CRB by January 29.


The board also questioned whether it was feasible for SoundExchange to set up a Web site for receiving playlist data to make it easier for smaller operations. SoundExchange has thus far resisted this idea for security and financial reasons. At this point, SoundExchange accepts data via FTP, e-mail attachments, CD-Rom delivery, or via floppy discs.


Though Internet radio already abides by census reporting, royalty payment status is still up in the air. Under a bill signed into law in October, Internet radio and copyright holders have until February 15 to come up with a royalty agreement or the decision will be handed back to the CRB.