Another irritating day for the webcasters of North America yesterday, as a panel of copyright judges threw out requests to reconsider the new online music royalty rates which were set last month and which many in the web radio sector say will force a drastic cut in services and put smaller players out of business.
As previously reported, web companies large and small hit out when the US Copyright Royalty Board, which controls the royalty rates for those American music services that benefit from blanket licenses, first announced the latest increase in what royalties online broadcasters would have to pay, many arguing that relatively speaking web radio firms would be paying much more than traditional terrestrial broadcasters.
The webcasters were temporarily placated when officials announced they would consider a review of that decision, but yesterday the Board's judges said that after that consideration they had decided to deny all motions for a full rehearing, while also declining to postpone the 15 May deadline from when the new royalties will be due. The only leniency offered to the webcasters was a decision to put off the proposed change in the way fees are calculated - from an 'average listening hours' system to a 'per-song, per-listener' system - for a year. That change in system will in itself increase the amount of royalties webcasters will have to pay the record labels and publishers.
Responding to the Board's announcement, Billboard quote N Mark Lam, the CEO of internet radio network Live365, who says that it is impossible to underestimate the implications of the Board's latest decision, adding that under their new royalty rules "there is no [webradio] industry". Lam isn't alone, webcasters large and small both seem to maintain the line that the new royalty rates just are not viable.
David Oxenford, a lawyer representing several webcasters, has told Billboard the next step is to appeal to the US Court Of Appeals for the District Of Columbia Circuit, but that this will take at least a year, and that the chances of the Appeals Court overturning the Board's decision are slim. Which means behind the scenes webcasters will have to go the political route, rallying their listeners and subscribers to lobby Congress for a more favourable royalty system for the webcasting sector. In that domain, Jonathan Potter, head of the US's Digital Media Association, told reporters that his sector enjoyed "a lot of legislative support".
The US music industry, which will benefit from the Board's decisions, have been generally quite quiet on the whole webcast royalty debate, though the royalty collecting society that represents the music business in this domain, SoundExchange, insists that all parties had sufficient opportunities to present their cases to the Board prior to the original decision being made and that, therefore, there is no need for a review. Despite claims by the webcasters that the new royalty rates will force them to cut services or put them out of business, SoundExchange, who presumably pushed for the higher rates, insist its mission is to see the internet radio sector "thrive", which is presumably true given that without the sector the body would become redundant. Whether the webcasters can, indeed thrive in light of the Board's recent rulings, remains to be seen. As always, the big mainstream services probably will, the more interesting independents (you know, the one's who support the bits of the music industry everyone else ignores) possibly won't.