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Senators Throw Support Behind Internet Radio

By Martin H. Bosworth
ConsumerAffairs.com

May 11, 2007

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Two Senators have introduced legislation that would overturn a decision that threatens to put Internet radio broadcasters and stations out of business due to crippling new royalty payments.

The "Internet Radio Equality Act" would vacate the recent ruling by the U.S. Copyright Royalty Board (CRB) that hiked payment rates for performances 300 to 1200 percent, and would reinstate the current standard of paying 7.5 percent of the broadcaster's revenue.

The Act's co-sponsors, Sens. Sam Brownback (R-KS) and Ron Wyden (D-OR), spoke of the need to support independent Web services that are built off Internet radio broadcasts.

“Keeping Internet radio alive is part of a broader issue that is important to me -- keeping the e-commerce engine running by preventing discrimination against it," Wyden said in a statement.

Brownback, a Senate Judiciary Committee member and Republican presidential candidate, said he was "alarmed by the recent Copyright Royalty Board decision and the effect it will have on Internet radio – especially small Webcasters with limited revenue streams. I am hopeful that with this bipartisan legislation Internet radio will continue to flourish."

The Senate bill joins companion legislation in the House.

Reps. Jay Inslee (D-WA) and Donald Manzullo's (R-IL) bill would also vacate the CRB decision and return to the previous payment standard. Inslee and Manzullo hailed Brownback and Wyden for introducing the bill, with Rep. Manzullo noting how the issue has garnered great attention from constituents.

"Since we introduced our legislation in the House two weeks ago, I have been inundated with messages from Internet radio listeners throughout the country thanking me for protecting this wonderful medium," Rep. Manzullo said. "This issue has ignited a flurry of passion from music lovers throughout our country, and I again thank Senators Wyden and Brownback for their efforts to help keep the music playing on the Internet.”

The CRB had originally scheduled the new rates to take effect on May 15, retroactive to the beginning of 2006, but agreed to extend the rate hike date to July 15, giving opposition efforts such as the "Save Net Radio" coalition more time to lobby Congress to pass legislation and to raise awareness of the issue.

Save Net Radio spokesperson Jay Ward thanked the Senators for taking action and urged a quick passage of the bill.

"We commend Senators Wyden and Brownback for their understanding of Internet radio’s importance and for their leadership in taking the steps needed to save it,” Ward said.

The new CRB royalty rates were largely crafted by SoundExchange, the royalty collections division of the recording industry. They would require that royalties be paid for streaming a single song to a single listener. The cumulative effects of the royalty payments would be too much for all but the biggest Internet radio sites to handle, putting them out of business.

The new rules also mandate flat minimum payments to be paid for any streaming in addition to the royalty payments, and the rules' breadth affects radio broadcasters ranging from National Public Radio (NPR) to Internet radio broadcaster Pandora.

NPR tried to appeal to the CRB to review the decision, but was denied. The network filed an appeal in Washington, D.C. district court to stop the new rules from taking effect.

Pandora founder Tim Westergren, one of the leaders in opposing the CRB decision, praised Brownback and Wyden for their legislative efforts.

"[Brownback and Wyden's] support shows an understanding of the invaluable exposure that Internet radio provides to emerging artists, as well as an acknowledgment of the diverse listening experience it offers to music lovers. We are hopeful that, with the Senators' support, this promising industry will finally be treated fairly so that it can continue to grow."

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