The Bad News First ...

There’s been much ado about the decision earlier this month by the Library of Congress’ Copyright Royalty Board (CRB) to significantly raise the per-song royalties paid by Internet broadcasters to copyright holders and performing artists. The ruling would raise rates from .07 cents per performance (or streamed song) in 2005, to .08 cents affective retroactively beginning Jan. 1, 2006. The CRB also stipulated that these rates increase over the next three years, peaking at .19 cents by 2010. Crucially, these new rules provide no exemption for small commercial webcasters seeking to pay royalties based on a percentage of their revenue rather than on a per-song basis. Nearly all involved, except of course SoundExchange, the non-profit organization who receives each webcaster’s royalty payments and distributes them to artists and copyright owners, agree that CRB’s ruling, if unchanged, marks the end of today’s internet radio boom. (See David Oxenford’s Broadcast Law Blog for insightful commentary. Oxenford is a partner at David Wright Tremaine, the firm who represented internet radio broadcasters in the recent debates with the CRB.)

Much less has been said about the investigation by the Federal Communications Commission (FCC) into the payola practices of media bad-boys Clear Channel Communications, CBS Radio, Citadel Broadcasting and others. The FCC is very close to administrating fines in the ballpark of $12 million for these companies’ long-standing “pay-to-play” transgressions. As part of the proposed settlement, stations owned by these media conglomerates would also be forced to open up 8,400 half-hour blocks of air-time to musicians from independent and small labels. (See Paul F. Roberts’ recent Salon piece, “The fate of indie music as we know it” for more details.)

While the CRB’s ruling may strike terror in the hearts of webstreamers like Pandora, and rightly so, at least the FCC proves that the federal government isn’t entirely heartless, at least when it comes to traditional radio.