Internet Radio Equality Act
Encyclopedia
The Internet Radio Equality Act, originally introduced as , is proposed legislation by Rep Jay Inslee (D) WA to nullify the May 1, 2007, determination of the Copyright Royalty Board
modifying the current webcast radio
royalties
and fees retroactively to January 1, 2006. The previous system charged radio stations a per performance rate of $0.000768, and it was that same rate from 1998-2005. The new system, effective May 1, 2007, increased that per-performance rate to the following levels: 2006=$0.0008, 2007=$0.0011, 2008=$0.0014, 2009=$0.0018, and 2010=$0.0019. This bill was introduced on April 26, 2007 by Rep. Jay Inslee
(D
-WA) and Rep. Donald Manzullo (R
-IL
) and has been cosponsored by over 100 members of the Congress
. It was introduced in the Senate
as S 1353 on May 10 by Ron Wyden
(D
-OR
) and Sam Brownback
(R
-KS
). The bill's proponents claim that "the majority of webcasters will go bankrupt and silent" when the Copyright Royalty Board's decision takes effect unless the bill passes.
The legislation appears to have been abandoned in committee, as of July 19, 2008.
. The CRB was privy to private financial records and business models of the webcasters, and after reviewing the evidence and testimony, issued their decision (currently under appeal) on May 1, 2007. It is dissatisfaction with the CRB decision that prompted the creation and sponsoring of the IREA.
Statutory license regulations dictate that digital transmissions of public performances of sound recordings need permissions from two sets of copyright owners—the owners of the musical work (usually the songwriter or the composer) and the owners of the sound recordings themselves (usually a record label, unless the artists own their own master recordings). Traditional radio stations pay a flat per-song fee, and are only responsible for paying the musical work royalty. Internet radio is an entirely different market, and is responsible for both royalties, according to the Digital Millennium Copyright Act of 1998.
The sound recording royalty, when paid under the provisions of the statutory license, is distributed to the featured artist on the recording, two musicians' unions, and the owner of the copyright—usually a record label.
While traditional radio stations cannot determine how many people are listening to their station at a given moment, this information is readily available to an Internet radio station. The Internet Radio Equality Act specifies that the provider may choose to pay royalties of:
2007: $14454 ($.0011/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
2008: $18396 ($.0014/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
2009: $23652 ($.0018/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
2010: $24966 ($.0019/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
SoundExchange also recently offered alternative rates and terms to certain eligible small webcasters, that allows them to calculate their royalties as a percentage of their revenue or expenses, instead of at a per performance rate.
These developments directly attend to some of the concerns prompting the creation of the proposed IREA, namely the "uncapped" $500 minimum fee, and the ability to assess liability at a rate other than the CRB determination.
Critics of the Act, such as musicFIRST and SoundExchange
, believe that the IREA is unnecessary, and that it would be a large windfall to large webcasters, allowing them to pay a fraction of what they have been paying since 1998. They also believe that the bill is flawed in principle, as it makes the rate less than what it was from 1998-2005.
Copyright Royalty Board
The Copyright Royalty Board is a U.S. system of three Copyright Royalty Judges who determine rates and terms for copyright statutory licenses and make determinations on distribution of statutory license royalties collected by the United States Copyright Office of the Library of Congress...
modifying the current webcast radio
Internet radio
Internet radio is an audio service transmitted via the Internet...
royalties
Royalties
Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
and fees retroactively to January 1, 2006. The previous system charged radio stations a per performance rate of $0.000768, and it was that same rate from 1998-2005. The new system, effective May 1, 2007, increased that per-performance rate to the following levels: 2006=$0.0008, 2007=$0.0011, 2008=$0.0014, 2009=$0.0018, and 2010=$0.0019. This bill was introduced on April 26, 2007 by Rep. Jay Inslee
Jay Inslee
Jay Robert Inslee is the U.S. Representative for , serving since 1999. He is a member of the Democratic Party. The district includes many of Seattle's northern suburbs in King, Snohomish, and Kitsap counties...
(D
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
-WA) and Rep. Donald Manzullo (R
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
-IL
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
) and has been cosponsored by over 100 members of the Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
. It was introduced in the Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
as S 1353 on May 10 by Ron Wyden
Ron Wyden
Ronald Lee "Ron" Wyden is the senior U.S. Senator for Oregon, serving since 1996, and a member of the Democratic Party. He previously served in the United States House of Representatives from 1981 to 1996....
(D
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
-OR
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
) and Sam Brownback
Sam Brownback
Samuel Dale "Sam" Brownback is the 46th and current Governor of Kansas. A member of the Republican Party, he served as a U.S. Senator from Kansas from 1996 to 2011, and as a U.S. Representative for Kansas's 2nd congressional district from 1995 to 1996...
(R
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
-KS
Kansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
). The bill's proponents claim that "the majority of webcasters will go bankrupt and silent" when the Copyright Royalty Board's decision takes effect unless the bill passes.
The legislation appears to have been abandoned in committee, as of July 19, 2008.
Background
The decision of the Copyright Royalty Board was made following the guidelines of a "willing buyer / willing seller" business model, and as the result of a two-year proceeding, with dozens of witnesses and hundreds of documents from over twenty different parties, including (but not limited to) large webcasters, small webcasters, NPR, college stations, and SoundExchangeSoundExchange
SoundExchange is a non-profit performance rights organization that collects royalties on the behalf of sound recording copyright owners and featured artists for non-interactive digital transmissions, including satellite and Internet radio.-History:Prior to 1995, SRCOs in the United States did not...
. The CRB was privy to private financial records and business models of the webcasters, and after reviewing the evidence and testimony, issued their decision (currently under appeal) on May 1, 2007. It is dissatisfaction with the CRB decision that prompted the creation and sponsoring of the IREA.
Statutory license regulations dictate that digital transmissions of public performances of sound recordings need permissions from two sets of copyright owners—the owners of the musical work (usually the songwriter or the composer) and the owners of the sound recordings themselves (usually a record label, unless the artists own their own master recordings). Traditional radio stations pay a flat per-song fee, and are only responsible for paying the musical work royalty. Internet radio is an entirely different market, and is responsible for both royalties, according to the Digital Millennium Copyright Act of 1998.
The sound recording royalty, when paid under the provisions of the statutory license, is distributed to the featured artist on the recording, two musicians' unions, and the owner of the copyright—usually a record label.
While traditional radio stations cannot determine how many people are listening to their station at a given moment, this information is readily available to an Internet radio station. The Internet Radio Equality Act specifies that the provider may choose to pay royalties of:
- 0.33 cents ($0.0033) per hour of sound recordings transmitted to a single listener, or
- 7.5 percent of the revenues received by the provider during that year that are directly related to the provider's digital transmissions of sound recordings.
Rate Comparison
The following comparison is calculated based upon an imaginary Internet radio station that broadcasts, on average, fifteen songs to one hundred listeners each hour. Totals given are per year.Internet Radio Equality Act rates
$2890.80 ($.0033/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)Copyright Royalty Board rates
2006: $10512 ($.0008/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)2007: $14454 ($.0011/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
2008: $18396 ($.0014/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
2009: $23652 ($.0018/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
2010: $24966 ($.0019/song * 15 songs/hour * 24 hours/day * 365 days/year * 100 average listeners/hour)
Alternate Rates and Terms to the Copyright Royalty Board Determination
SoundExchange recently came to an agreement with certain large webcasters regarding the minimum fees that were modified by the recent determination of the Copyright Royalty Board on May 1, 2007. While their decision imposed a $500 per station or channel minimum fee for all webcasters, certain webcasters represented through DiMA negotiated a $50,000 "cap" on those fees.SoundExchange also recently offered alternative rates and terms to certain eligible small webcasters, that allows them to calculate their royalties as a percentage of their revenue or expenses, instead of at a per performance rate.
These developments directly attend to some of the concerns prompting the creation of the proposed IREA, namely the "uncapped" $500 minimum fee, and the ability to assess liability at a rate other than the CRB determination.
Support and Controversy
Internet broadcasters have organized the SaveNetRadio coalition, which is supporting this legislation; a nationwide "Internet Radio Day of Silence" took place among participating broadcasters on June 26, 2007.Critics of the Act, such as musicFIRST and SoundExchange
SoundExchange
SoundExchange is a non-profit performance rights organization that collects royalties on the behalf of sound recording copyright owners and featured artists for non-interactive digital transmissions, including satellite and Internet radio.-History:Prior to 1995, SRCOs in the United States did not...
, believe that the IREA is unnecessary, and that it would be a large windfall to large webcasters, allowing them to pay a fraction of what they have been paying since 1998. They also believe that the bill is flawed in principle, as it makes the rate less than what it was from 1998-2005.