Internet Radio Fairness Act Seeks to Balance Radio Streaming Rates

Rep. Jason Chaffetz (R UT), the legislation (HR 6480) would insure that all forms of digital radio, whether satellite, cable, or Internet compete against each other on a level playing field.  Companion legislation (S.3609) has been introduced in the Senate by Sen. Ron Wyden (D OR). The proposed legislation is significantly different from other performance royalty bills, such as that sponsored by Rep. Nadler, which seek to increase the performance royalty fees for on-air radio broadcasts.  This bill does not seek to increase the performance royalty fees for radio broadcasters. Rather its goal is to lower the fees for Internet performances.

Under the current law, royalty rates for Internet radio are established based on what the copyright royalty judges determine to be a “marketplace” rate.  As a result the judges often determine that these rates should be different from other services, Rep. Chaffetz notes that the current method has led to webcasters paying much higher royalty rates than other digital music broadcasters, like satellite and cable.

The legislation proposes to change the current “market place” standard and replace it with the same legal standard used for other services, i.e., the so-called 801(b) standard.  The 801 standard is used for all other forms of statutory royalty rate setting including cable, satellite radio and for determining the royalties paid by the recording industry to music publishers and songwriters.  When establishing rates under the proposed bill, copyright royalty judges would consider a number of factors including; 1) the rates paid for non-interactive services under voluntary license agreements, 2)the public’s interest in both the creation of new sound recordings and fostering on line performances, 3) the income necessary to provide a reasonable return on all relevant investments and 4) to the extent they are relevant, the rates and terms that have been agreed under competitive market circumstances by copyright users.

To see a copy of HR 6480 click  here.

October 9, 2012

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