Bloodsucking RIAA at it again...

Let's hope they have the ability to compromise...

quote:

Webcasters' Doom Could Remix the Future of Music 05.14.07 | 2:00 AM Ah, the long goodbye. Looming, potentially astronomical royalty-rate hikes first sent webcasters scrambling toward a May 15 deadline, then a July 15 deadline and now, potentially, an indefinite slide all the way into next year. But the outcome looks the same: You can still kiss your favorite online radio station goodbye. Webcasters will either go out of business trying to pony up the 3 percent to 20 percent pay hikes (up to $110 per online listener each year based on these calculations) or they'll ruin themselves trying. For the user -- who's probably not willing to pay a penny for what's previously been free and doesn't want to suffer through more ads -- that change means less music variety, fewer tool options and far less customization. Yeah, just about everything that makes online radio so great. But all is not lost. Webcasting may spiral into its own dark ages, but the resulting debate over royalties could drive Congress into overhauling copyright law and finally forcing the music industry, kicking and screaming, into the future (or at least the present). Of course, that's no help to webcasters now. For the most part, they're pooling efforts to fight the Copyright Review Board's ruling that they pay the new fees to SoundExchange, the former RIAA division tasked with collecting and distributing online radio-licensing fees to artists and labels. Webcasters are taking a three-pronged approach to finding a solution. They're hoping for a federal judge-issued emergency stay that comes out of the appeal process or a deal with SoundExchange or, perhaps, congressional intervention. Each option is fraught with obstacles. According to Jake Ward, spokesman for SaveNetRadio, "The law that enacted the royalty is in place. If you go by the theory of legislative inertia ... (webcasters) have an uphill battle to overturn that royalty rate." Legislative inertia is not enough to stop webcasters from trying to save their skins, of course. Fritz Kass, chief operating officer of the Intercollegiate Broadcasting System, which represents college and non-commercial radio and has appealed the rates: "On June 1, 2007, or soon after, the chief judge ... will lay out dates and times for the parties to present their case.... This process can take several months, or over a year," Kass explained in an email. DiMA Executive Director Jon Potter said his organization, which represents webcasters large and small, will also file an appeal before the May 31 deadline. One component of these appeals is the request for an emergency stay to postpone SoundExchange's royalty collection for the duration of the proceedings. Jessica Litman, a law professor at the University of Michigan, and Ross Dannenberg, an attorney at Banner & Witcoff, Ltd., agreed that the yet-to-be-assigned judge will most likely issue this emergency stay. If the U.S. Court of Appeals in the District of Columbia Circuit confounds expert wisdom by refusing to stay the rates, webcasters such as Pandora and Live365 will face immediate and certain insolvency, as execs wind up writing checks greater than the value of their companies. "Webcasters are moving forward with the understanding that royalty payments are due July 15th, and that the bill will include all of 2006 and the first five months of 2007," explained SaveNetRadio's Ward. "As it stands, that day will put many thousands of webcasters in the red." If the appeals fail, an emergency stay won't come cheap for webcasters. Those massive royalty payments will accumulate interest until they are due, and as Litman said, "If the Lexus dealer says 'no money down' for the next 12 months, that doesn't mean you go buy a Lexus." Webcasters may not even make it onto the proverbial car lot. If the rates stand as July 15th draws near, SoundExchange will almost certainly negotiate to keep webcasters alive -- and Congress out of its hair. "If SoundExchange wants to keep Congress from getting involved," Litman said, "it's not great strategy to insist on royalties or that (webcasters) shut down. My guess is that if there isn't a stay, SoundExchange will be willing to make an informal arrangement (with webcasters)." If the court grants the stay, as expected, congressional intervention becomes more likely because SoundExchange would have less incentive to deal with webcasters directly. As both sides plead their cases in appeals court and congressional hearings, neither will be in a position for conciliatory action toward the other -- they'll be too busy making arguments in their own favor. The House and Senate have already introduced bills that would overturn the new rates in favor of a new scheme that would charge webcasters 7.5 percent of revenue -- the same percentage charged to satellite broadcasters (terrestrial radio stations, profitable for years, are entirely exempt from mechanical licensing, which webcasters, representing a fledgling industry, claim is unfair). The big question: Why might SoundExchange be so afraid of congressional intervention? And, conversely, why do webcasters want it so badly? Because Congress could do more than just rejigger a royalty rate, and that gets me to my big point: Considering that more than 70 million congressional constituents listen to online radio and webcasters have lobbyists of their own, there might be enough combined influence to balance out the RIAA's considerable lobbying efforts. Ward said SaveNetRadio "supports any time granted that would enable webcasters to continue broadcasting while a structural solution is pursued in Congress. A structural solution would benefit webcasters and the artists (who) depend on internet radio, so that we don't have to do this every five years." I couldn't agree more. Congress has the constitutional authority to rebuild copyright law from the ground up and should take this opportunity to do so. Our Byzantine, cobbled-together copyright laws hurt all parties involved, from artists to labels, distributors to fans. They hold the present to ancient standards that make less sense each year. With any luck, the Copyright Royalty Board's decision, initially so terrifying to the online community, will be seen as a helpful seed in the edifice of copyright law that germinated, cracked the foundation and brought down the whole rickety structure, allowing webcasters, labels and Congress to build something that makes sense today as opposed to 50 years ago. This may sound optimistic, but it's a possibility -- provided Congress has the gumption to act when the time comes. For now, it's time to heat up some popcorn and watch as the battle unfolds, the lawyers get paid and the future awaits

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