Internet Broadcasters Deserve Royalty Parity (Rep. Jay Inslee)

On March 2, 2007, the Copyright Royalty Board (CRB), a three member panel affiliated with the Library of Congress, issued a decision that changed royalty expenses for commercial and noncommercial webcasters and will likely end Internet radio as we know it today.  According to the decision, which is retroactive beginning January 1, 2006, and commences through December 31, 2010, commercial and noncommercial webcasters would be subject to an increase in royalty rates from .08 cents in 2006 per performance to .19 cents per performance in 2010.  The new royalty rates amount to a 300 percent increase for the biggest webcasters and up to 1200 percent for small webcasters.  For most webcasters the royalties will exceed their gross revenues and bankrupt them.  The CRB has refused to reconsider its decision so the higher royalties – including retroactive royalties back to January 2006 – are due May 15, 2007.  My fear is that these new rates will decimate Internet radio.  The 70 million Americans that listen to Internet radio every month no longer will have access to this music service.

For these reasons, I have introduced the Internet Radio Equality Act, H.R. 2060, which provides royalty parity for Internet radio providers.  The bill vacates the CRB’s March 2 decision and changes the royalty rate-setting standard that applies to commercial Internet radio royalty arbitrations so that it is the same standard that applies to satellite radio, cable radio, jukeboxes, and record companies (when they are licensees of songwriters).  The bill also sets a transition rate through 2010 that is the same royalty rate that satellite radio services pay (7.5 percent of revenue).  Finally, the bill expands the Copyright Act’s Section 118 musical work license for noncommercial broadcasters like National Public Radio to enable those broadcasters also to perform sound recordings over Internet radio at royalty rates designed for noncommercial entities. 

I believe strongly that it is the responsibility of Congress to promote media diversity in all areas including web-based broadcasting and to ensure affordable consumer access to Internet media.