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NAB tabs Net royalty decision as unfair

Clear Channel, Cox, Emmis join org in protest

The National Assn. of Broadcasters, along with some of its biggest members, has filed an appeal against a court ruling that requires radio broadcasters who stream their signals on the Web to pay royalties to record companies.

In documents filed with the 3rd Circuit Court of Appeals in Pennsylvania, the NAB argued that a district court decision to uphold the royalty payments unfairly held broadcasters’ online simulcasts to a royalty system from which terrestrial radio is exempt.

“The very same radio programming that, when transmitted over the air, has been universally recognized to promote record sales and greatly benefit the recording industry, when transmitted over the Internet, has been classified with those activities that supposedly threaten the vitality of that industry,” the NAB said in its filing. “This outcome is completely at odds with congressional intent.”

Joining the trade org in the filing were radio broadcasters Clear Channel, Cox, Emmis, Bonneville Entercom and Susquehanna.

For decades, no radio station owner has had to pay royalties to record labels when their songs are played over the airwaves. The radio biz justified this exemption by saying the broadcasts constituted an invaluable promotional service for new music.

When many stations began repeating their signal over their Web sites for free, they argued that the same standard should apply — even though Internet-only broadcasters had to pay the royalties under existing law.

But the Copyright office ruled — and the district court later agreed — that simulcasting terrestrial radio signals on the Net was a digital transmission as defined in the 1998 Digital Millennium Copyright Act and other recent copyright legislation, and therefore subject to all applicable royalties.

The Recording Industry Assn. of America, which originally petitioned the Copyright Office two years ago to keep the radio exemption from migrating into cyberspace, called for the broadcasters to seek a solution in the marketplace.

“We are hopeful that the court will reject the broadcasters’ appeal for the same reasons that the Copyright Office and the district court did,” said Steve Marks, the RIAA’s senior VP for business and legal affairs. “Rather than seek special treatment from the courts, we encourage the broadcasters to work with the labels and artists as our industries transition into new businesses.”

Librarian of Congress James Billington recently affirmed a per-stream royalty rate of 0.07 cents for simulcasting of terrestrial radio music, as determined earlier this year by a copyright royalty arbitration panel (CARP) set up by the U.S. Copyright Office.

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