April 27, 2007 06:20 PM UTC

Internet Radio Equality Act introduced

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• by: PBAbramson

Some of you may be aware that last month there were new royalty rates for internet radio stations established by the Copyright Royalty Board (the CRB).  Those rates are retroactive to Jan 1, 2006 and are so high that they would effectively put every internet radio station out of business as they amounted to more than 100% of revenues for most stations.  The rates are set to go into effect on May 15, 2007 unless Congress intervenes.

I am very pleased to report that Rep. Jay Inslee (D-WA) and Rep. Donald Mancullo (R-IL) have introduced the Internet Radio Equality Act.  This Act would establish rates for internet radio stations that are much closer to those paid by satellite stations and would allow many stations (though not all) to stay in business.  The webcasting businesses with whom I’m working believe strongly that these rates are fair for artists, copyright owners and for internet radio stations.

The bill still needs more co-sponsors and the support of the full House.  If you believe that internet radio is worth saving and believe as I do that this bill is a fair solution, please contact your representatives and ask them to co-sponsor this bill and to support it when it reaches the floor for a vote  http://www.house.gov…

If you’d like to read the full bill, I’ve made it available at http://www.pbabramso…

The most significant aspects of the bill as they relate to keeping internet radio alive are:

1. The Act nullifies the recent decision of the CRB judges

2. The Act instructs future CRBs that the minimum annual royalty per service may be set no higher than $500.  The CRB ruling called for a minimum of $500 “per station” which, in the case of services like Pandora who offer each user a personalized station, would result in royalties due of tens of millions of dollars per year and would make it financially impossible for webcasters to offer personalized stations

3. Establishes a “transitional” royalty rate, until the 2011-15 CRB hearing, of either .33 cents per listener hour, or 7.5% of annual revenues as opted by the webcaster.  This is among the most significant changes to the rates set by the CRB which did not provide for a “percent of revenues” payment, instead requiring webcasters to pay on a “per song-per listener” basis.  Under the CRB established rates, a station with an average of 500 listeners playing ~16 songs/hour would have to pay ~$75k for 2006 and more than double that by 2010 regardless of their actual revenues.  The logic behind the percent of revenue rate is an attempt to match the royalty rate that satellite radio pays.