Webcasters Ask Berman and Leahy for 'Parity' with Satellite Radio Royalty Rate

The webcasters who make up the Digital Media Association (DiMA) sent a letter to two influential members of Congress asking them to intervene by passing legislation that would override the royalty rates set by the Copyright Royalty Board (CRB).

The group, which includes RealNetworks, AOL Radio, Yahoo! Radio, Pandora and Live365, claims that the CRB's rates constitute "more than 50 percent of revenue," whereas the rates the CRB set for satellite radio operators range from 6 percent to 7.5 percent. In the letter, they ask Howard Berman (Chair of the House IP
Subcommittee) and Patrick Leahy (Chair of the Senate Judiciary Committee) to "consider performance royalty parity for broadcast, satellite, cableand Internet radio as the Committees re-evaluate broadcast radio’shistoric royalty rate exemption"

Here's the full text the letter:

December 3, 2007

The Honorable Howard Berman [other copy sent to The Honorable Patrick Leahy]
Chairman
U.S. House Committee on the Judiciary
Subcommittee on Courts, the Internet and Intellectual Property
Washington, DC 20515

Dear Chairman Berman:

We write to you in our capacity as providers of innovative, royalty-paying Internet radio services that are enjoyed by millions of Americans. We are following with great interest your investigation of the exemption that terrestrial broadcasters currently enjoy from paying sound recording performance royalties, and we understand that you may soon introduce legislation to remove this exemption. We believe this may present a unique opportunity to level the playing field among all music radio providers while also ensuring that artists receive fair compensation for the use of their works.

The Copyright Act currently has three distinct sound recording performance royalty schemes for music radio services.

• Broadcast radio is exempt from paying royalties, so it pays nothing to recording artists and copyright owners.

• Most satellite and cable radio services (e.g., XM, Sirius, Music Choice) are “pre-existing” as defined by statute. Pursuant to a statutory four-factor balancing test (§17 USC 801(b)), these services have historically paid royalties between 3% and 7.5% of revenues.

• Internet radio and “new” subscription service royalties are set pursuant to the willing-buyer willing-seller standard (§17 USC 114(f)(2)(b)). Internet radio royalties have historically exceeded 30% of revenue, and recently the Copyright Royalty Board relied on this standard to set royalties that effectively average more than 50% of revenue.
In contrast, songwriter performance royalties for all radio services generally total between 3 and 5% of revenue.

All radio services compete for advertising dollars, paying subscribers, or both. Our companies compete aggressively with one another, and with broadcast, satellite and cable radio. Our ability to offer innovative and competitive services to American listeners is undermined, however, by laws that create vastly disparate royalty obligations.

As your inquiry into broadcast royalties proceeds, we look forward to working constructively with you to ensure that royalty parity exists among all radio services and that creators receive fair and reasonable royalty payments.

Thank you for your consideration of our views.

Sincerely,

Rob Glaser Chairman/CEO, RealNetworks Managing Director

Lisa Namerow AOL Radio

Ian Rogers, General Manager, Yahoo! Radio

Joe Kennedy CEO, Pandora

Mark Lam CEO, Live365

cc: U.S. House of Representatives Committee on the Judiciary