RAIN's ongoing coverage of the CARP and RIAA license fee arbitration is brought to you by these fine firms: Learn more about them in our RAIN Industry Guide (here)!

BY PAUL MALONEY
Since the decision by the federally-appointed arbitration panel in setting royalty rates for streaming radio broadcasts came down like a hammer last week, the webcasting industry has been scrambling to try to come up with an appropriate and effective response.

The feeling is almost unanimous that the ruling, which would extract from webcasters $0.0007 per song per listener for radio retransmissions over the Internet -- and twice that for streams originating on the 'Net -- is extremely unfair, unrealistic, and will prove to be an overwhelming burden to all but the "deepest-pocketed" companies. Many have expressed the idea that since the royalty fees are at a "per performance" rate and are independent of revenues, they fail to take into consideration the economic realities of an undeveloped industry.

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For those companies that were actual participants in the CARP proceedings, a formal procedure for appealing the decision is in place. Though the entire appeals process has been allotted a span of 60 days, Kenneth Steinthal, a partner with Weil, Gotschal and Manges in New York who represented webcasters in the CARP, told RAIN that until this Wednesday -- just seven more days -- to file a notice of petition to appeal with the U.S. Copyright Office.

Though no plans of appeal have yet been made public, broadcasters and webcasters that participated in CARP include Clear Channel Communications, Susquehanna Radio Corp., AOL/Spinner, XACT Radio Network, and Live365.com. Look for follow up on this topic in RAIN soon.

Other webcasters and industry figures not part of the hearings have their own plans to protest the decision.

Webcaster/solutions company Loudeye Technologies, webcaster Ultimate 80s, and online radio audience measurement service MeasureCast have collectively formulated a letter they plan to send to the General Counsel of the Copyright Office in Washington, asking for reconsideration and reevaluation of the CARP's decision. (Look for a piece devoted to this effort coming soon in RAIN).

Saying "The businesses and jobs of enormous numbers of people are at stake," industry news source Streaming Magazine is urging those in the field to submit their comments about the decision to the site. They say they will collect them and forward them en masse to Congress and the Copyright Office in what they're calling "The Streaming Magazine CARP Project" (here).

Radio Ink and Streaming Magazine publisher (and webcaster Radio Central CEO) Eric Rhoads, in an editorial in Streaming Magazine today (here), suggests that the record industry is purposely trying to crush the webcasting industry to maintain profits and control of music. "I...have a strong sense that, despite the appearance of cooperation, there’s a behind-the-scenes push being made by very powerful record companies to get payback for missing out on radio royalties," Rhoads hypothesizes. (Though broadcasters are compelled to pay fees to the publishers and composers of the musical works they use, not until webcasting has the record industry been able to collect on their copyrights for radio.)

He continues, "Instead, the RIAA is driving Internet radio companies out of business with usage fees that cannot equate to success — and with restrictions and reporting requirements that are unreasonable, practically impossible, potentially in violation of privacy laws, and ultimately not good for business." His editorial includes the address for correspondence to the Copyright Office and Library of Congress.

As of publication, Derek McNeill of Los Angeles webcaster dublab.com has collected 185 signatures to his online petition (here) is just days. The petition, addressed to the Copyright Office, calls the royalty decision "completely unreasonable."

"If the rates and terms set forth in CARP's report are adopted by the U.S. Copyright Office," the petition reads, "the webcasting industry faces the risk of being forced out of business."

Beethoven.com is taking a similar route as McNeill's. The country's top classical webcaster's Kevin Shively told RAIN in an e-mail that Beethoven.com has posted information for listeners on both the royalty rates and the reporting requirements.

He said, "In the first 24 hours, we have gotten over 400 unique listeners to send this message to the Copyright Office. We have also taken a page cue our friends at [Oxford, OH broadcaster] WOXY and put a form on that page for people to search for the contact info for members of their congressional delegation."

Springfield, Missouri broadcaster Ron Johnson of KTOZ-AM, whose protests regarding music copyright fees (here) has been reported in RAIN (here), is planning a conference for parties interested in devising a plan to fight the CARP decision. "The RIAA, the Copyright Office...BMI, SESAC, ASCAP -- they're gonna put radio right out of business," he insisted. Johnson told RAIN he would decide on dates for the conference soon, which will be held in Branson, MO.

Johnson said his station has also been running public service announcements on the air, to notify the public of the situation. This tactic, RAIN understands, is also being employed at stations like educational broadcaster KSDS/San Diego.

Conspicuously absent -- so far -- with an announced plan for appeal is the National Association of Broadcasters. The NAB has taken heat before for moving slowly on webcasting-related matters, especially its lack of significant resistance to the passage of the Digital Millennium Copyright Act, the law that's really set all of this process in motion.

NAB CEO Eddie Fritts did make a public objection to the CARP ruling. In a statement, he said, "If the powerful record company interests’ goal was to strangle a fledgling new service to radio listeners, it may have succeeded beyond its own expectations."

But Dennis Wharton, head of corporate communications at the NAB, did indeed tell RAIN that it's "a little early" for his organization to make public its intentions. And the fact is that since the NAB was not a CARP participant, they don't a the right to formally petition the Copyright Office (and are thus not bound by this Wednesday's deadline), and the Librarian of Congress's decision won't come until May anyway.

Look for more news and analysis as further plans to combat the CARP decision.