Just when record labels thought it was safe to start charging webcasters on a per-listener, per-song basis, the US Copyright Royalty Board that set the rates has been charged unconstitutional in the Federal Court of Appeals.
During the royalty rate proceedings, a company called Royalty Logic proposed that it compete with SoundExchange for the collection of digital royalties from webcasters. Instead, the Copyright Royalty Board decided to make SoundExchange – formerly a division of the RIAA – the only party authorized to collect these royalties. Then, the board waved its potentially unconstitutional wand to turn SoundExchange's proposed rates into law.
In a motion filed on Tuesday, Royalty Logic claimed that Congressviolated an appointments clause in the Constitution by enacting a lawthat permitted the Librarian of Congress to appoint the three judgeswho make up the Copyright Royalty Board, pictured above being sworn in totheir posts. (Oddly, the Library of Congress page from which I originally downloaded this image of the judges is now blank.)
The deadline for appealing the rates has passed, but Royalty Logic has asked the Appeals Court
for permission to file an additional argument that the CRB's very creation violated a Constitutional clause.
If the court agrees, royalty rates setby the CRB forwebcasters and satellite radio operators could be invalidated, according to Billboard. Labels and webcasters would have to pack up their lawyersand head to Washington to start the whole process all over again, whilewebcasters would gain a reprieve from the rates they say threatened their continued operation.
Photo: Downloaded from the Library of Congress website in March 2007
