Copyright Royalty Board Offers Relief with Licensing Fees

Last week Internet webcasters received some relief from paying exorbitant licensing fees for Internet radio channels.  The Copyright Royalty Board set rates for webcasters in 2007 based on per song per listener.  Essentially, each time an Internet radio station played a song,  a royalty fee was assessed. Expectantly, if an Internet radio station has thousand of listeners, these fees can add up!  Also the Board assessed each Internet radio station an annual minimum $500 fee per channel.  This was of great concern to the Internet radio stations because it is commonly known Internet radio stations can have hundreds of channels.  Thus, the fees could become cost prohibitive very quickly.

The rates were approved by Congress in 2007 and became federal law.

They were further revised in March ’09.  However, the webcasters initiated legal action, to challenge the rates.  Specifically, the webcasters argued the Board’s refusal to permit them to pay royalties as a percentage of revenues “was arbitrary and capricious” considering their small size and lack of revenue the radio stations receive. On July 10, the U.S. Court of Appeals for the District of Columbia, rejected the webcasters challenge of the rates.  The court argued, the rates were not unreasonable and were based on sufficient evidence (market analysis and expert testimony.)  However, the court did rule that the $500 annual per channel fee was overly excessive and ordered the Copyright Royalty Board to reconsider and readjust the annual fee for each channel.

This decision by the courts is a small victory for small webcasters.

However, independent and non-profit webcasters still believe the rates per song are too excessive.  Currently, the rates are set around 7 percent per song played and will double by year 2010. But there is a light at the end of this tunnel.  Before the Court released its decision, the webcasters did negotiate a settlement with SoundExchange that based rates on the size and financial viability of each internet station.

The Webcasters Settlement Act of 2007 gave webcasters the option to elect an alternative set of rates and terms than those issues by the Copyright Royalties Board.

Clearly small and non-profit radio stations are fighting to stay in business.  Hopefully, the new royalties rates per the SoundExchange settlement will satisfy copyright owners, publishers and webcasters alike.

About the Author
Latoicha Givens is the founder and a member of the firm Phillips Givens, LLC. Ms. Givens practice includes represention of start-ups, small, and mid-sized businesses in intellectual property matters, specficially, trademarks, copyrights, and licensing issues. She is the author of IPLAW101.com, a blog covering Intellectual Property issues specifically trademark law - trademark registration and infringement; Domain Name Disputes: Cybersquatting; Licensing and Intellectual Property issues in New Media.
See all posts by Latoicha Givens.