Senator Bob Graham,
524 Hart Senate Office Building
Washington, D.C. 20510
Dear Honorable Senator Graham,
I am writing you out of fear. I'm afraid that the U.S. Copyright Office is about to wipe out one of the newest advances in communication, the fledging Internet radio industry.
This issue has nothing to do with Napster or music piracy. Internet radio is not about illegally swapping files, it's about tuning in; a perfectly legal practice that boosts new musicians and increases sales for record companies -- especially the small businesses that make our country thrive.
But the Digital Millennium Copyright Act (DMCA) requires the Copyright Office to set a "sound recordings performance royalty" rate for Internet radio. Last summer, the Copyright Arbitration Royalty Panel (CARP) decided on a royalty rate that goes beyond reasonability, far more severe than anything Congress could have intended.
The rate set by CARP arbitrators is far higher than the rate for composers' royalties (a rate largely based on a single deal made between Yahoo! and the RIAA before the big dotcom bust).
Rather than charging a percentage of gross revenues - a concept both sides were willing to accept - CARP arbitrators recommended a fixed price per song streamed per listener. This would be like charging a man playing his boom box from his apartment window a fee for every person who walked on the sidewalk below. Some stay and enjoy the music, others listen for a moment and walk on - but every person on that sidewalk will cost the broadcaster.
What's more, the Copyright Office has proposed that the man with the boom box in his window actually make the headcount of every person who has walked by on the sidewalk, in essence - by instituting recordkeeping and reporting requirements far beyond the abilities of most webcasters to fulfill.
The numbers run like this: At first, the RIAA asked webcasters for a royalty of 15% of gross revenues, and webcasters offering approximately 3% of gross revenues (similar to the royalty paid to composers). Unable to come to terms, the CARP stepped in and, to everyone's surprise, recommended a price-per-song-per-listener plan... at an astounding high price. If the same rate were applied to major radio broadcasters, it would work out to 20 percent of gross revenues (more than the RIAA dreamed possible). But for most Internet hobbyists and small-time entrepreneurs, people who make a nickel here and a nickel there from advertisements, the
proposed rate adds up to 200% to 300% of gross revenues. Good bye cottage industry! Good bye small business! And, for those of us on the listening end, good bye alternative to commercial, morally bankrupt pop tripe!
And if that wasn't bad enough, the royalties are retroactive to October 1998. For a popular independent webcaster that has attracted, over the past three years, an average audience of 1,000 listeners (decent for an Internet site, but a mere fraction of even the smallest radio station), the retroactive billing comes to $525,600 a rate of 500% to 1000% of their gross revenues to date.
This cannot be what the DMCA what written for, can it? If the Library of Congress adopts these recommendations, that will be it for Internet radio. One of the most exciting new developments in communication technology, dead in the water.
I respectfully urge you to communicate to the Librarian of Congress that you and your fellow legislators, in passing the DMCA, did NOT intend for it to bankrupt Internet radio.
Many of your constituents are more than concerned - we're worried about the future of broadcasting.
Sincerely,
Reverend Grant Balfour |
