RAIN – CRB Update

From CNET News: “We already know that Webcasters small and large are outraged at the prospect of having to pay higher royalty fees to the music industry,…“But the heightened royalty rates enacted by the U.S. Copyright Royalty Board earlier this year and scheduled to take effect July 15 are not the only thing that’s firing up leading Internet radio industry companies like RealNetworks, Yahoo, Pandora and Live365.

“In letters distributed to various Capitol Hill offices on Thursday morning, the four companies’ CEOs argue that the music industry will also be forcing collection of more than $1 billion per year from three services alone—Yahoo, RealNetworks and Pandora—in the name of covering so-called administrative costs.

“Here’s how they say they derived that figure: When the CRB decided earlier this year to change the rules for Internet broadcasters, it also decided to levy a $500 minimum annual fee per Internet radio ‘channel.’ SoundExchange… says that minimum payment is supposed to cover administrative costs.

“But since some of the larger Internet radio services potentially offer their listeners hundreds of thousands of unique ‘channels’ (RealNetworks’ Rhapsody offered more than 400,000 in 2006 alone, according to a company spokesman), the companies view the ruling as forcing them to multiply that mandatory minimum payment accordingly (for Real, that would amount to $200 million).

“Such an amount would far outpace the $20 million in total royalty fees collected by SoundExchange from the Internet radio industry last year, the CEOs note in their letter. And besides, it’s not even clear that those payments would go to artists, as royalty payments do, the companies argue.

“While we don’t imagine SoundExchange would keep this $1 billion all to itself, this lack of clarity is absurd,’ RealNetworks spokesman Matt Graves told CNET News.com.

“SoundExchange did not respond to requests for comment.”

Read the entire article at CNET News.

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x Even the most staunch advocate in Congress on the side of the copyright owners has got to see the flaw in this aspect of the CRB decision: The CRB judges set a rate that includes $1 billion in administrative fee payments to administer $20 million in royalty distribution! That’s an egregious error which the Internet Radio Equality Act would fix. – KH x