In a move that is being welcomed by Internet radio operators, Congress took a first step this afternoon toward overturning the March 2, 2007 decision to increase royalty rates for stations streaming over the Internet during the years 2006-2010. We previously summarized this decision in the March 2007 "Memo to Clients" and updated the status of this proceeding in an April 2007 MTC article describing the effect of the Copyright Royalty Board’s denial of Petitions for Rehearing of the March 2, 2007 decision.
With the May 15, 2007 implementation of the harsh new rate structure hanging like a dark cloud over the future of Internet radio, Rep. Jay Inslee (R-OK), joined by 8 other Representatives, introduced the "Internet Radio Equality Act." This bill explicitly states that the Copyright Royalty Board’s March 2, 2007 and April 17, 2007 rulings with regard to webcasting are "not effective and shall be deemed never to have been effective."
Instead, the House proposes a rate structure that is closer to that which is in place for satellite radio. Internet radio operators would be charged a minimum annual fee of $ 500 per provider of services (as opposed to the $ 500 per channel that had previously been provided). Commercial radio stations will be given a choice between payment of .33 cents per listener hour (aggregate tuning hour) or 7.5 percent revenues directly attributable to streaming for the year. Noncommercial stations will be required to pay 1.5 times the amount paid to ASCAP, BMI and SESAC for use of the underlying musical compositions, though separate agreements can be negotiated for noncommercial stations. Any new rates would be retroactively applied to January 1, 2006.
The bill also contemplates greater participation by the FCC, NTIA and CPB in any future ratemaking proceedings, requiring those entities to file certain reports relating to the effects of proposed rate determinations on localism, diversity and competition in both the over-the-air and Internet radio marketplaces.
The full text of the bill can be found on the Radio and Internet Newsletter at: http://www.kurthanson.com/documents/Internet_Radio_Equality_Act.pdf. It has been referred to the House Committee on the Judiciary, whose Member can be found here: http://judiciary.house.gov/CommitteeMembership.aspx.