Internet Radio Equality Act …

                           Internet Radio Equality Act
                                            S. 1353
The Internet Radio Equality Act , introduced by Senators Ron Wyden (D-OR) and Sam
Brownback (R-KS), addresses mistakes and deficiencies of a March 2, 2007 decision by the
Copyright Royalty Board (CRB) that will dramatically increase the royalties payments owed to
rights holders for the streaming of music offered on the internet. The legislation addresses both
noncommercial and commercial streaming services. Among the groups affected by the CRB
decision are public radio websites and programming containing sound recordings of music,
whether whole or partial tracks. The exceptions are recordings directly licensed or covered by
fair use, or less than 30 seconds. .

The Internet Radio Equality Act corrects the shortcomings of the CRB's decision by
modernizing the Copyright Act to recognize public radio's public service mission. This is
accomplished by putting royalties paid by public broadcasters to owners of copyrights in sound
recordings under the same system and standards as royalties paid by public broadcasters to
owners of copyrights in musical works.

Why is this needed:

    ·   Public broadcasters have only recently begun to engage in activities requiring payment of
        royalties for copyrights in sound recordings. The advent of new technology and new
        means to fulfill our public service mission has brought on these royalty obligations and,
        accordingly, the need to update Section 118 of the Copyright Act.

    ·   The recent CRB decision resoundingly demonstrates the serious problems with treating
        public broadcasting under the general Copyright Act provisions applicable to commercial
        entities for streaming sound recordings. It also demonstrates the urgent need to include
        public interest factors when setting royalty rates and structures for public broadcasters.

What is Section 118:

    ·   Section 118 was established by Congress as part of the Copyright Act of 1976 for the
        explicit purpose of recognizing the public interest in "encouragement and support of
        noncommercial broadcasting" which led Congress to determine that "the nature of public
        broadcasting does warrant special treatment in certain areas." H.R. Rep. No. 94-1476
        (1976) at 117 (emphasis added). Accordingly, Congress stated its intent to "assure a fair
        return to copyright owners without unfairly burdening public broadcasters." Id. at 118
        (emphasis added).
    ·   With Section 118, Congress recognized the Public Policy need to treat public
        broadcasting separately. Section 118 encourages the owners of copyrights and public
        broadcasters to reach negotiated agreements on royalty levels, and such agreements have
        been the pattern in the 30-year history of the provision.

    ·   Public Broadcast Royalty Status When 118 Enacted. In 1976, public broadcasters
        were using the airwaves to transmit their programming and, accordingly, did not owe
        owners of copyrights in sound recordings any royalties for those activities. However,
        public broadcasters are making use of digital networks to deliver content. Accordingly,
        public broadcasters using websites to stream music programming and other programming
        with music components are subject to royalty payments to owners of copyrights in sound
        recordings.

    ·   Negotiated Agreements Have Been the Pattern. Section 118 encourages the owners
        of copyrights and public broadcasters to reach negotiated agreements on royalty levels,
        and such agreements have been the pattern in the 30-year history of the provision. Where
        negotiated agreements have not been reached with all parties, the fact that some
        agreements have been achieved has served to guide arbitrators to reasonable balancing of
        the dual public interests involved.
.
Recent CRB Streaming Decision Demonstrates the Need to Change Section 118.

    ·   The recent CRB decision demands both fees and measurement methods that are
        impossible for public broadcasting to provide and inappropriate to public broadcasting's
        public service mission.

                         Its basic royalty increases are 250% above the previous rates.

                         It also requires a wholly new "per play" royalty calculation process and
                         payment scale for stations that have significant online streaming
                         listeners, an approach that is simply unworkable (as well as
                         unaffordable) for public broadcasters.

    ·   In making its determination, the CRB rejected arguments from public broadcasters for
        public policy considerations favoring lower rates, stating that Congress had not expressed
        its intent to apply such considerations for these services.

    ·   These levels would be catastrophic for public broadcasters and negate decades of
        Congressional support for the public interest in promoting public broadcasting. It is time
        for Congress to act to reassert those public interest considerations.

Transition Provision. Because this would authorize new negotiations and, if negotiations fail,
new Copyright Royalty Board proceedings, the proposal would also establish annual royalty
levels for a transition period, set at 1.05 times the annual royalties paid during the period ending
December 31, 2004 (the last date on which the previous royalty agreements were in effect). This
would provide copyright owners with a reasonable increase in royalty levels without causing the
major disruptions that the CRB decision would have.


                              For more information, contact Mike Riksen
                               NPR 202-513-2741 or mriksen@npr.org