BY KURT HANSON
It's difficult, when you're on an arbitration panel assigned by Congress to determine the royalty rate that a "willing seller" and a "willing buyer" would agree to, to determine such a rate at a point in history during which the sellers don't want to sell.

Yet, in an nutshell, that may have been what went wrong with the process in the recent Copyright Arbitration Royalty Panel (CARP) for Internet radio. The three arbitrators (Gulin, Van Loon, and Von Kann) interpreted — or misinterpreted — their assignment as finding the rate that a willing seller and a willing buyer did (rather than "would") agree to, in the U.S., during the time period in question. And at that time, the sellers weren't selling.*

Had the arbitrators interpreted their instructions slightly differently, they might have looked at a vast record of deals in which sound performance royalty rates were established — specifically, decades of such deals in Canada, Europe, and Australia.

And, in fact, such testimony WAS presented to them by webcasters, via the written testimony of an expert named Paul William Kempton, founder of a U.K.-based consulting firm that consults on royalty negotiations across Europe.

The chart below represents RAIN's summary of his findings. Columns #2-3 refer to the royalty for the composer of a song (analogously, in the US, the royalty due ASCAP / BMI / SESAC). Columns #4-5 refer to the royalty due for the performance of the song. Column #6 looks at the ratio between the two. (Percentages in columns #3 and #5 are of either total station revenues or of station advertising revenues. "PRO" means performing rights organization):

From Rob Pegoraro's "Fast Forward" in The Washington Post: "Internet radio did not die last week. The stay of execution came from an unlikely figure, Librarian of Congress James Billington [below], who rejected without comment a proposal for royalty payments that Web broadcasters said would bankrupt them...

"How did we get here? How could such a diverse, creative medium be threatened with government-mandated financial ruin?

"Easy: Start with good intentions, then let the lobbyists go to town...

"Rejecting this exploitative scheme was the right call. Other digital services have much fairer, simpler royalty arrangements.

"For instance, the Music Choice network available through DirecTV pays a flat fee of 6.5 percent of revenues. Satellite radio services are still haggling over royalties, but New York-based Sirius Satellite Radio says the RIAA isn't demanding per-listener fees. 'I think they understand why it's not practical,' said Doug Kaplan, Sirius's deputy general counsel...

"FM and AM stations will start digital broadcasts later this year, using technology developed by Columbia-based Ibiquity Digital Corp. What will musicians get for these CD-quality, easy-to-copy broadcasts? Nothing...

"If artists do deserve this compensation -- note that the law requires half of these royalties go directly to musicians, with the other half going to their labels -- then all broadcasters should pay up equally...

"To do otherwise would amount to imposing a special tax on Web radio, even as every other representative and senator claims to want to promote broadband Internet access.

"I'd like to see Congress step in and fix things. But Congress also created this mess and a great many other tech-policy disasters, and I have a hard time trusting it to do the right thing this time."

This story is from Sunday's Washington Post. Read it online here.

[an error occurred while processing this directive]

From The Guardian: "Guardian Media Group, the owner of the Guardian and Observer newspapers, has moved a step closer to buying Jazz FM after a deadline for rival bids passed without an offer being posted.

"GMG made a 180p [$2.63] per share offer for the radio station earlier this month. Clear Channel International, which holds a 30.9% stake in Jazz FM, said it would accept GMG's offer unless a competitor bid 220p [$3.22] or more.

"The deadline for a competing bid passed [Tuesday]. This effectively handed 50.5% of Jazz FM to GMG by adding Clear Channel's stake to the 18% shareholding GMG already holds.

"GMG...sent details of its 180p per share offer to the radio broadcaster's shareholders. The Jazz FM board had stalled on recommending the original offer, therefore forcing a hostile bid."

Read this article in The Guardian here. Jazz FM is a broadcaster that also streams its content on the Web. In fact, it regularly has one of the world's top rated webcasts, ranked second for the month of April according to both Arbitron (861,600 Aggregate Tuning Hours) and Measurecast (1,164,308 Total Time Spent Listening; 224,451 Cume).