Copyright Holders to Radio: Don't Be a Scrooge

by Chloe Albanesius

The season of 24-hour holiday music is upon us, but it's not all jingle bells and Rudolph for a music copyright coalition, which is demanding that radio stations hand over adequate royalty rates.
"In the spirit of the holidays, we're asking that the radio industry not be a Scrooge," Jennifer Bendall, executive director of musicFIRST, said in a statement. "Join us in closing the loophole in copyright law and ensuring that fair competition is provided to the artists and musicians who bring music to life and listeners' ears to the radio dials."
Internet broadcasters have long paid royalty rates to stream music on their Web sites, but traditional radio stations have not had to pay because, they argue, exposure on their radio stations leads to increased record sales and profits for artists.
MusicFIRST, a coalition of music and recording foundations, wants to change that.
The group slammed radio stations for taking in $16 billion a year in advertising revenue without sharing a cut with the artists that produce their content.
"There are over 100 versions of 'Merry Christmas, Baby,' and although each artists' version is unique, they all have one thing in common: when their performance is played on AM and FM radio, the artist is not compensated," according to musicFIRST. "And they are not alone – terrestrial radio doesn't pay any artists or musician when their music is played over the air, not a single penny, not for a single song."
The fight for terrestrial radio royalty rates is not a new one. Earlier this year, Congress introduced H.R. 4789, which would require traditional radio stations to pay royalty fees just like their Internet counterparts. Stations that make less than $1.25 million per year would have the option to pay a flat $5,000 annual fee, while public broadcasting stations would be charged $1,000 per year, but that legislation has not yet seen any major traction.
Internet radio stations like Pandora, meanwhile, spent much of the last two years battling royalty rates that they claimed would put them out of business.
In March 2007, the government-run Copyright Royalty Board (CRB)handed down rates that would have increased the current price per stream to one user of $0.0008 to $0.0019 per stream by 2010 and imposed a minimum fee of $500 per station.
Web stations balked, with Pandora claiming that those rates would eat up $18 million of its $25 million annual revenue.
Finally, Congress and President Bush approved a bill that allows stakeholders to broker a deal over royalty payments without the threat of government intervention.
Internet radio royalties operate under a government license, so Congress would typically need to approve any deal reached by webcasters and copyright holders. The bill approved in September allows them to negotiate without that government intervention. The two sides have until February 15 to come up with a deal on their own.
At this point, satellite radio pays royalty rates that are about 6-8 percent of revenue, while cable providers pay a royalty rate that is about 12-17 percent of revenue. In October, the CRB ruled that the royalty rate for permanent downloads, like those found via Apple's iTunes, as well as physical CDs, will remain at 9.1 cents per download.
http://www.pcmag.com/article2/0,2817,2337221,00.asp?kc=PCRSS03069TX1K0001121