Saturday, July 14, 2007

Legislation Introduced To Give Internet Radio Last Minute Repreive

On Thursday July 12, 2007, Rep. Steven Chabot [R, OH-1]and Rep. Nydia Velazquez [D, NY-12] introduced H.R.3015 which is designed to provide a 60 day delay before a ruling of some Copyright Royalty Judges destroys the American Internet radio industry. The popular bill has been referred to the House Judiciary Committee and is expected to pass quickly and without much opposition. It's passage will not have any impact on the two regulatory bills H.R.2060 and S.1353 currently working their way through Congress.

Taking It Back To The Roots reports that the consensus of the House Committee on Small Business following a June 28 hearing was “that fair compensation to musicians was crucial, but that the royalties as they currently stand could be prohibitively expensive for small internet broadcasters.”

Until recently industry groups seemed content to kill Internet radio. In fact, as I reported earlier, some believe killing Internet radio was their goal. The hearings seem to have changed the attitude of the music industry.

Radio and Internet Newsletter (RAIN) says that during the hearings John Simson, the executive director of the industry group SoundExchange, promised that small and noncommercial webcasters may continue streaming after July 15th without fear of legal action so as long as good-faith negotiations between the parties are continuing. During a July 12 interview with RAIN, Simson explained

For the people who want to comply with the law and are in bona fide negotiations with us, we don't want those people to be intimidated. And we don't want them to stop streaming. . . . That's just so long as they're continuing to pay under the license they had.
What is particularly galling about all of this is that while the Copyright Royalty Judges probably followed the law, the law was designed for broadcast stations and juke boxes, and not for the Internet. As a result their ruling threatens to destroy a fledgling American industry. For example, the order imposes a $500 per "station" minimum fee. That doesn't sound bad until you realize that many of the Internet radio "webcasters" use a distributed computing model involving thousands of computers and the order defines each computer as a separate "station." One webcaster, thousands of "stations," means instant death for every Internet radio webcaster using the distributed computing model.

It looks like cooler heads are beginning to recognize that the death of Internet radio is not in the best interests of either the public or the music industry. PC Magazine reported yesterday that the parties have reached a tentative settlement. I suspect Congress is hoping that the settlement takes hold before they have to act, and as the music industry is discovering, given the popularity of Internet radio, they will act.