Published by Randall Krause on Tuesday, March 20, 2007 [Permalink] [Return to Top]
How the Royalty Rate Rulings Went Awry
There have been some promising new developments thus far in the Copyright Royalty Board frenzy. Several parties have filed motions for rehearing, including both DiMA and ClearChannel. However, the small commercial Webcasters are once again vying for a revenue-based royalty rate.
I believe that the Copyright Royalty Judges dismissed that proposal with good reason during the prior proceeding. For smaller companies, a rate schedule that takes both ATH and revenue into consideration is both more favourable and economically feasible than one based squarely upon revenue or "spins"[1].
The primary shortcoming of the Small Webcaster Settlement Act is that it permitted digital music services to exploit sound-recordings to an exceptional (and arguably excessive) degree — yet failed to recognize the intrinsic "value" being derived from such unrestrained use of these creative works. In short, revenue is not reflective of the magnitude of the performances taking place. It has the potential, if not properly formulated from the unique circumstances of each Webcaster, to actually deprive recording artists and record producers from just compensation for their artistic labour.
While I think that the SWSA was an effective stopgap solution for the newly emerging online music marketplace in 2002, those historic royalty rates and terms should rightfully have no bearing within the current phase of litigation.
However, with that said, the setting of new rates and terms should necessarily take the best interests of the public into account. That is why I object to the Copyright Royalty Board as an "institution" for this purpose. Failing to provide a reasonable means for digital music services to transition to the newly established license fees (whether through a "grace period" or "tiered fee schedule", or some form of alternative relief) effectively tips the balance of power completely in favor of copyright holders — which is contrary to the intent of U.S. copyright law.
Even more importantly, eradicating an entire segment of the streaming media industry, and doing so indiscriminately, certainly does not serve the public good either.
[1] Digital Media Association is continuing to push for royalty rates based solely on listenership, or ATH.
Randall Krause
Executive Director
Small Webcaster Community Initiative
randall@smallwebcaster.org
