Today's the day! We hope you can make it to our RAIN Reader Cocktail Party, today 5-7p at the Gordon Biersch Brewery Restaurant. It's just one block from the convention hotel at 7th and Pine, right above the Barnes & Noble. No need to RSVP, just join us! Hope to see you this afternoon.

BY PAUL MALONEY
Broadcasters, citing their ongoing appeal as to whether they should be subject to webcast royalty fees at all, filed a motion with the U.S. Copyright Office requesting a "limited stay" on those royalties.

The request, from commercial broadcast groups Bonneville, Clear Channel, Cox, Emmis, Entercom, Salem, and Susquehanna -- as well as the National Association of Broadcasters -- was delivered late Wednesday to Registrar of Copyrights Marybeth Peters (pictured left) from the law firm of Weil, Gotshal, and Manges.

Broadcasters are currently arguing in the Third Circuit Court of Appeals that the language of the DMCA does not make them liable for royalties for the use of sound recordings, as they are exempt for the use of such in over-the-air broadcasts.

"If AM/FM Streaming later is found to be exempt by the Third Circuit," the broadcasters' motion reads, "and this application for a stay is not granted by the Copyright Office, thousands of radio stations will suffer irreparable harm in that they will have been required to dedicate substantial resources to the complex task of calculating, preparing statements of account and making royalty payments covering a four-year retroactive period as well as ongoing monthly royalty payments..."

The broadcasters claim to fear the "very real spectre of administrative chaos" and "multiple law suits" that would result from refund claims from broadcasters who paid royalties, only to later be found exempt from those royalties by the Court.

Commercial broadcasters -- with the exception of Salem -- refrained from filing appeals to the Librarian of Congress's final determination on the webcast royalty rates themselves.

A copy of the motion (in Adobe Acrobat format) can be found on the NAB website here.

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From the Associated Press: "AOL Time Warner Inc.'s America Online division announced a new management structure Thursday in a shake-up that included the dismantling of a department whose business transactions have come under scrutiny.

"The changes, which restore America Online veteran Ted Leonsis to a more prominent position, are intended to give newly appointed chief executive and chairman Jon Miller a more direct say in brand, marketing and technology issues...

"Under the new structure, executive vice president and chief financial officer Joseph Ripp becomes a vice chairman with responsibilities including network infrastructure and technology operations.

"He and Leonsis, who is already a vice chairman, will effectively function as Miller's No. 2's. Leonsis will oversee new councils on brand, product and technology strategy.

"Current chief operating officer J. Michael Kelly becomes chairman and chief executive of AOL International. AOL Interactive Services president James de Castro will work on a Senior Strategy Council with Ripp, Leonsis, Miller and Don Logan, chairman of AOL Time Warner's media and communications group."

Read this entire AP story in Yahoo! here.

This is Part 4 of 5 in a series...


BY JOEL WILLER
for Radio And Internet Newsletter
College webcasters who have for any length of time watched developments on the digital sound recording performance royalty front expected this rate determination would look very much like previous rate determinations for noncommercial statutory licenses with Performance Rights Organizations ASCAP, BMI, and SESAC. Noncommercial broadcasters' statutory licenses with the PROs have always been based on a blanket fee, not on a per-performance royalty.

After reading the earlier installments of this series, the reasoning behind the previous royalty determinations should be self-evident. First, any exercise to attempt to determine an exact number of college webcaster "performances" is futile and highly prone to overwhelming errors. Second, the low-volume of listenership for the typical college radio station makes elaborate royalty collection schemes impractical, both for the stations and for the copyright owners.

Under the per-performance model, the royalty collection machine is likely to totally consume the limited fees to be collected from college webcasters, long before any money is paid to artists or recording labels. If the costs of paying the royalty, when added to the royalty itself, outweigh the perceived advantage to the college webcaster, the station will simply cease providing the service, as many already have done. In either case, the artist receives no financial benefit. Actually, the artists stand to lose the promotional assistance provided by the increased public exposure provided by the college webcasters.

Rejection of "flat fee" model was wrong
The National Religious Broadcasters Music License Committee urged the CARP to base noncommercial broadcaster sound recording performance rates upon the flat fees paid to the Pros The arbitration panel declined this suggestion, stating, "Putting aside our hesitancy to utilize over-the-air musical works performance rates as a proxy for webcasting sound recording performance rates, those fees were settled pursuant to joint proposals that are not part of this record."

The panel thus erred in not just rejecting the amounts of the prior PRO statutory licenses as proxy for the webcasting rates, but in also rejecting the model of a blanket license for noncommercial webcasters.

The final CARP report states that "a per-performance metric 'is directly tied to the nature of the right being licensed.'" However, previous arbitration processes, also tied to licensing performance rights for musical works, have determined that the blanket fee metric can be appropriate for noncommercial broadcasters.

A mixed message comes from the Librarian of Congress, who later makes reference to the rejected PRO licenses in his final determination:

Librarian of Congress Dr. James H. Billington

"One last disputed issue raised by the non-CPB, noncommercial broadcasters is the imposition of the same $500 minimum fee that the CARP set for all other licensees. They argue that a $500 minimum fee far exceeds any reasonable rate that should be imposed on this category of users in light of the financial considerations that distinguish them from the other services. In support of this position, the users cite Dr. Murdoch's testimony to illustrate that the Internet license for use of SESAC's repertoire is less than $100. But this is not the total amount that a noncommercial station would pay; it would also have to pay fees to BMI and ASCAP in order to license all the works included in the sound recordings covered by the section 114 license. The minimal amount that a webcaster must pay to cover the combined works administered by the three Pros is $673, more than the proposed minimum rate to operate under the section 114 license."

In this statement, the Librarian arbitrarily and wrongly assumes that the size of non-CPB, noncommercial broadcasters' Internet audiences are of the same size as their over-the-air audiences. Once he elected to compare the rates under the two licenses, the Librarian was obliged to ensure his comparison was proportionate.

As with previous segments of this series, I'll use data from the University of Louisiana at Monroe's KXUL to demonstrate the harm caused by this mistake. For the calendar year 2001, KXUL's average Internet audience was just 0.77% of the station's over-the-air audience, yet the minimum sound recording performance fee ($500.00) is 74% of the total PRO license fees for noncommercial broadcasters ($673.00). The Librarian's final decision seemingly values Internet performances several orders of magnitude greater than over-the-air performances, which is an unfounded determination.

Even Librarian and RIAA can accept
comparable agreements as benchmarks
The Librarian's decision demonstrates that he is willing to revisit the appropriate use of precedent established by the PRO rate proceedings. What he neglected to do, however, was to recognize that the CARP committed a legal error when the panel failed to fully consider the model of a blanket fee for small-volume services like college broadcasters. With this scheme's accompanying lowered administrative costs, a rate in keeping with the nature of these services could be established, while still protecting the interests of the copyright owners.

Even the RIAA has acceded to the merits of a blanket license fee for noncommercial broadcasters. The RIAA negotiated a private agreement with the Corporation for Public Broadcasting that includes a single blanket fee covering the Internet retransmissions of 410 noncommercial radio stations funded by CPB. That pact represents the only accord negotiated by the RIAA with a noncommercial broadcaster. The terms of this agreement received no apparent consideration by the CARP, although the negotiation was prompted by the arbitration panel. This turn certainly contradicts a section heading in the CARP report: "Comparable Agreements are the Best Benchmark."

Joel Willer is an Assistant Professor of Mass Communications at the University of Louisiana at Monroe and general manager of the school's radio station KXUL. There will be one more installment to this series. Read Part 1 here, Part 2 here, and Part 3 here...