11th hour negotiations have put a temporary hold on the July 15th deadline for increased royalty payments for Folk Alley.
From Andi Sporkin, Vice President for Communications, NPR:
July 13, 2007 - "NPR and CPB had a productive meeting today with SoundExchange. At the meeting, no agreement was reached on a substitute for the March 2 decision of the Copyright Royalty Board. CPB offered a payment to SoundExchange, that has been accepted, to cover what NPR and CPB believe is due July 15 as the base rate payment for stations beginning March 2, 2007. NPR and CPB are confident that public radio stations can continue their music streaming operations for the next three months as good faith discussions are ongoing about the structure and amount of the ultimate fee. At this time, public radio stations will continue music webcasting without limit to visitors to their webstreams or changes in their current operations."
On March 2, 2007, the federal Copyright Royalty Board released a decision that will have damaging consequences for public radio stations that stream music. The Board rejected decades of precedent by placing commercial royalty payment schedules and reporting requirements on public radio stations. This decision exposes the public radio system to huge increases in royalty payments and promises drastic curtailment of the programming diversity found on public radio stations' websites. Additionally, because the CRB's decision requires public radio stations to pay royalties on a per song/per listener basis, it directly contradicts public radio's public service obligations and mission. In a very direct way, the CRB decision penalizes Folk Alley for the organization's service to the public: under the new policy, the greater the listener reach of the stream, the larger the royalty payments.
Folk Alley has been operating since January 2006 under an expired agreement. Beginning as early as 2004, NPR (acting on behalf of public radio webcasters) has made numerous unsuccessful attempts to renew or renegotiate an official royalty rate. Although an increased rate was expected because initial amounts were very favorable for non-profit Internet broadcasting, the proposed levels in the March CRB ruling shocked the webcasting industry. NPR asked for a rehearing of the case and was denied by the CRB.
Rates would start at $.0008 per song, per listener for music streamed retroactive to January 2006 and would increase each year for four years reaching $.0019 per song, per listener in 2010 - more than doubling the new rate in a four year span. Folk Alley could see a 1000% climb in royalty rates in year one and will be expected to pay for the 18-month period beginning in 2006 on July 15, 2007. This decision affects not only Folk Alley, but all webcasters from small to large. The larger royalty payments will be added to streaming costs that, unlike terrestrial broadcast expenses, do not produce efficiencies of scale. It costs a radio station the same to broadcast to one listener or a thousand, but webcasters pay a per listener cost to transmit their signal.
In April, U.S. Reps. Jay Inslee (D-WA) and Don Manzullo (R-IL) filed legislation in the U.S. Congress that would vacate the CRB's March 2 decision and create a system of royalty rate payment parity affecting Internet radio, as well as satellite radio, cable radio and jukeboxes. The Internet Radio Equality Act includes a proposed transitional rate of 7.5% of revenue, which is a substantial increase in money that Folk Alley and other webcasters will be providing to music copyright holders. The CRB's system uses SoundExchange as the exclusive royalty distribution partner.
The Internet Radio Equality corrects the mistakes and deficiencies of the CRB decision. H.R. 2060 modernizes the Copyright Act to recognize public radio's public service mission. This is accomplished by putting royalties paid by public broadcasters to owners of copyrights in sound recordings under the same system and standards (Sec. 118 of the Copyright Act) as royalties paid by public broadcasters to owners of copyrights in musical works.
The Senate has now joined the battle with S. 1353 put forward by U.S. Senators Ron Wyden (D-OR) and Sam Brownback (R-KS). Both the House and Senate versions of the Internet Radio Equality Act will need to pass through several committees before going to the floor. To be successful in this legislative effort to save public radio webcasting, as many members of the House and Senate as possible need to support this legislation or it could die before moving to committee. While progress is being made and the list of supporters grows daily, time truly is of the essence.
If this is an issue you feel strongly about, please contact your U.S. Congressman and Senators and make your voice heard.
Because of ongoing mail screening, many Congressional offices are suggesting that letters be faxed or that contact be made directly by phone. Additional details on the CRB and their initial decision, a link to locate Congressional contact information, websites for the lead Congressmen, a list of Representatives currently supporting the legislation and more are located below.
Congressional Testimony: Small Business Committee of the House
See a list of U.S. Representatives currently listed as co-sponsors of H.R. 2060, the Internet Radio Equality Act. If your Representative is listed, a letter may be sent to reinforce the need for this support. If your Representative is absent, ask your local member of Congress to join the growing list of co-sponsors. Time is of the essence.