Thank you for contacting me with your concerns regarding the recent decision by the Copyright Royalty Board to substantially raise music royalty rates for Internet radio stations. I appreciate hearing from you and agree with you.
As you know, on March 2, 2007 the Copyright Royalty Board (CRB), which oversees sound recording royalties paid by Internet radio services, increased Internet radio's royalty rates to 0.19 cents per song streamed. The rate change would apply retroactively to 2006 as well as all future webcasts.
Prior to the decision, Internet radio already paid royalty rates higher than other broadcasting methods. Through 2005, Internet radio subscription services paid 10.9% of revenue in royalties, small webcasters paid 12% of revenue, and large webcasters paid a "tuning hour" royalty that averaged 33% of revenue. The CRB's decision is projected to increase royalties between 300 and 1200 percent.
In addition to this, the CRB decision also imposes a $500 "minimum payment" for any station. Given that the larger Internet radio services offer literally tens of thousands of stations, often generated "on demand" for users based on their listening habits, this decision will assuredly have a substantial impact on selection, competition and innovation, most likely squeezing out the independent, small-label and non-mainstream artists who have flourished online.
H.R. 2060, the Internet Radio Equality Act, has three major provisions to address these concerns. I have cosponsored this legislation. First, it invalidates the CRB decision.
Second, it includes provisions governing royalties for commercial Internet radio broadcasters and sets royalty rates to 7.5% of revenue - slightly higher than satellite radio - for a transition period until a royalty agreement is reached under the new rules.
Lastly, it would treat non-commercial Internet broadcasters, like public radio operators, differently. These operators enjoy special statutory treatment in all other forms of broadcasting due to their non-profit status and public purpose. The bill would simply set royalty rates for Internet broadcasting equal to the rates public radio pays for all other broadcast media.
H.R. 2060 is currently pending in the House Judiciary and Energy & Commerce Committees. Again, thank you for contacting me about this important issue.
Sincerely,
M
Gwen Moore
MEMBER OF CONGRESS
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-- Heather: "I don't suffer from insanity, I enjoy every minute of it!"
"Tell me, does it move you, Does it soothe you, Does it fill your heart and soul with the roots of rock & roll? When you can't get through it you can listen to it with a 'na na na na', Well I've been there before" -"Been There Before" by Hanson
