A panel of judges at the Copyright Royalty Board has denied a request from the NPR and a number of other webcasters to reconsider a March ruling that would force Internet radio services to pay crippling royalties. The panel’s ruling reaffirmed the original CRB decision in every respect, with the exception of how the royalties will be calculated. Instead of charging a royalty for each time a song is heard by a listener online, Internet broadcasters will be able pay royalties based on average listening hours through the end of 2008. Related Stories
The ruling is a huge blow to online broadcasters, and the new royalty structure could knock a large number of them off the ‘Net entirely. Under the previous setup, radio stations would have to pay an annual fee plus 12 percent of their profits to the music industry’s royalty collection organization, SoundExchange. It was a good setup for the webcasters, most of whom are either nonprofits or very small organizations.
National Public Radio spearheaded the appeal, arguing that the CRB’s decision was an “abuse of discretion” and saying that the judges did not consider the ramifications of a new royalty structure. Under the new royalty schedule, NPR will see its costs skyrocket.
This is, of course, exactly what SoundExchange and the RIAA wanted, in collusion no doubt with the National Association of Broadcasters. Can’t compete with a new format? Don’t bother innovating! Just legislate it out of existence!