RAIN's ongoing coverage of the CARP ruling is brought to you by these fine firms. See our RAIN Industry Guide (here)!

BY KURT HANSON
In an effort to help our industry coordinate and publicize all of the various initiatives currently underway from Webcasters in response to the recent CARP ruling on Internet radio royalty rates, RAIN's crack team of interns pulled an all-nighter last night to produce a new website called "Save Internet Radio."

However, because we just reserved the domain names (.com and .org) last night, they have not yet had time to propagate throughout the Internet, so for the next couple of days, you'll have to find it at http://208.3.135.80 or by clicking the screenshot at right.

We hope you'll find the site offers a useful summary of the issues involved and a comprehensive set of links to all the various parties' efforts.

At the top of the left-hand menu of our new site you'll find links to ten or more of the industry's best response efforts, including proposed letters to the U.S. Copyright Office, Congress, press contacts, and various petition efforts.

Those Webcasters who are leading the CARP response efforts include Radio Paradise's Bill Goldsmith, a coalition of industry players including Measurecast's Ed Hardy and Ultimate-80s's Dave Landis, Streaming Magazine, CyberRadio2000, 3WK, 97X (Oxford, OH), AudioGraphics' Ken Dardis, and a petition written by one of the founders of Dublab. The links in the left-hand column of the new website go directly to their efforts.

The"Save Internet Radio" home page currently features a nice, simple, 12-paragraph summary of the legislative history behind the DMCA and the CARP ruling. (This was inspired by the fact that some Webcasters are telling their listeners that "a law is about to be passed." In fact, the law was passed in October, 1998! The CARP ruling is simply part of the Copyright Office's implementation of that law.)

Coming later today, we'll add to the site a summary of what we believe are the best arguments to have been raised so far in objection to the CARP panel's decision, pulling from the response efforts described above, from recent "RAIN Reader Feedback," and from other sources.

We're also writing a summary of the proposed techniques that have been suggested to communicate those objections to the appropriate parties (e.g., petitions, letter-writing campaigns, efforts to get press coverage, etc.), accompanied by advice from various Washington, D.C., insiders regarding which of those techniques they believe would be most effective.

Give us your feedback! We hope that you will find our new site to be a valuable resource in the upcoming days. Please send your comments, suggestions, etc., to us using the "Feedback" form below or via e-mail here.

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BY KURT HANSON
Buried deep within the 143-page report of the recent Copyright Arbitration Royalty Panel (CARP) hearings on Internet radio royalties are a number of fascinating facts, rationales, and rulings — including a ruling that Webcasters, if the ruling is accepted by the Copyright Office, may offer "listener-influenced" Webcasts at no increase in the statutory royalty rate!

This has been a key bone of contention between some Webcasters and the RIAA, generating several lawsuits — and possibly one of the reasons for the disassembling of Viacom's Sonicnet.com, which had some degree of personalization features, and Launch.com's willingness to sell out late last year to Yahoo!

The ruling apparently allows a "skip" button, artist and song ratings that have an influence on music played, and other personalization features, as long as the webcast produced stays within the other restrictions of a statutory licenses (e.g., no front-promotion of song titles, no "instant requests," a limited number of plays from one CD or artist per three-hour period, etc.), — all without an increase in the royalty rate that non-listener-influenced Webcasters would pay.

Quotes from the CARP report (here) regarding that topic and others follow:

CARP allows listener-influenced
services at same statutory rates
"While RIAA may believe that listener-influenced services displace demand for sales of their phonorecords (see e.g., Tr. 1508-12 (Griffin)), there is no empirical evidence before us to confirm this belief... We also note that RIAA has reached agreements with several licensees that offer listener influence at rates consistent with its predominant rate (without premium)..."

"The Panel cannot imagine how one would meaningfully draw the line between those services eligible for the basic webcasting rate and those that would be subject to a separate rate for listener-influenced services. Indeed, neither side has adequately described such a line of demarcation. We conclude that so long as a service complies with, and is deemed eligible for the statutory license, it should not pay a separate rate based upon listener influence."

"Skip" button simultaneously allowed and
perhaps priced out of the market
"We find no justification for excluding short performances merely because the listener elected to skip a sound recording. The functionality of certain services that allow listeners to skip unwanted performances provides a benefit to webcasters.

"Although the record does not support a higher performance rate for services that provide this functionality, neither does the record support penalizing the copyright owners for this benefit to webcasters – a benefit that allows webcasters to offer a more satisfying experience to their listeners. None of the 26 agreements provides an exemption for skipped songs and no exemption is warranted."

... It's nice that the CARP ruling permits Webcasters to offer listeners a "skip" button, as it's one of the features that we believe consumers appreciate most about Internet radio. However, by charging $.0014 for every song that's played, even for only a moment, offering a "skip" button could become so expensive that Webcasters can't afford to offer it! ...

Setting the rate for side channels
was also based on Yahoo! deal
"The record is devoid of direct evidence of the willing buyer/willing seller rate for archived radio retransmissions. But the Panel must resolve which rate, of those we have already determined, should apply to these retransmissions – the 0.07¢ RR (and commercial broadcaster) rate, the 0.14¢ IO rate, or some other rate.

"In accordance with our previously articulated reasoning, the best benchmark for
determining royalty rates for the transmission of archived programming, side channel
programming, and substituted programming, is the Yahoo!/RIAA license agreement.
That agreement provides compelling record evidence of two willing buyer/willing seller
rates: (1) a rate for Internet retransmissions of AM/FM broadcasts (RR rate); and (2) a
rate for all other Internet transmissions."

The radio simulcast rate is for
simultaneous transmissions only
"Absent contrary evidence, the Panel concludes that the Yahoo! RR [radio retransmission] rate applies only to simulcast transmissions and does not include archived transmissions, side channel transmissions, or transmissions containing substituted programming...

"The Panel determines that the 0.07¢ performance rate applies only to simulcast transmissions. All other transmissions are subject to the 0.14¢ performance rate."

... Here's a critical question for ad insertion companies (e.g., Hiwire, Lightningcast, Loudeye) and the stations that use them: Is it possible that the Copyright Office would consider inserted spots to be "substituted programming"? If so, does that mean that the use of ad insertion would double a station's royalty rate? ...

TO BE CONTINUED: Our summary and analysis of the CARP ruling will continue tomorrow in RAIN.

XM Satellite Radio has reportedly received a patent for a technology that would enable them transmit specific information to targeted geographic -- which has further heightened the fears of the broadcast industry which sees the service as potential competition.

The satellite radio industry has insisted all along that their need for terrestrial repeater technology is simply to "fill in the holes" in their satellite broadcast coverage (in dense urban areas where buildings and overpasses tend to hamper satellite reception, for example).

But according to reports, the National Association of Broadcasters (NAB) fired off a four-page letter to the FCC which accuses XM of trying to horn in on local radio programming.

NAB president Edward Fritts (above right), on the industry organization's website, said "we are astonished to learn that XM Radio has secretly acquired a patent that will allow the company to provide local radio programming." He continues by saying, "the FCC International Bureau has either dropped the ball, or that XM believes it does not have to play by the rules." He calls on the FCC to deny XM's request for approval of a permanent repeater network.

XM, however, insists they're being honest about using the repeaters only to support their national coverage. XM spokesman Charles Robbins told Radio & Records that his company is in "absolute agreement" with NAB's demands. He insists his company's scientists merely applied for the patent to protect the "intellectual property" of their discovery.

See R&R's story here.

"No one is transmitting...an exact duplicate..."

"They should be paying me!"

"Rabid assault on consumer choice..."

"It will be a travesty..."

"Completely inconsistent public policy..."

Keep in mind

"Effectively stifling this new outlet..."

"What a difference from...starting commercial FM..."

"Zero impressions...zero exposure..."

"Such a discriminatory plan..."

"Millions and millions of golden eggs..."

Pity the poor record companies. They're going after what could have been thousands upon thousand of geese laying millions and millions of golden eggs. Imagine audio streaming sites that attracted listeners who were interested in buying the music instead of waiting around to copy it from an inherently imperfect audio stream the next time it was played.

As the record companies know all too well, radio stations plays have always been the major factor driving record sales. Why not on the Internet?

Record companies should stay focused on shutting down the "Napsters" of the Internet and a host of similar large files sharing services. The real culprits are bootleggers the world over, independent of the Internet, who as soon as a song or album is released immediately start copying and selling CD's. Keep going after them not the geese which lay golden eggs.

	Mar. 14, 2002	16th Annual Bayliss Radio Roast: New York, NY
	Apr. 5-8, 2002	Broadcast Education Association 2002: Las Vegas, NV
	Apr. 6-11, 2002	NAB 2002: Las Vegas, NV
	Apr. 23-26, 2002	Streaming Media West 2002: Los Angeles, CA
	Sept. 12-14, 2002	NAB Radio Show 2002: Seattle, WA
	October 1-4, 2002	Streaming Media East: New York, NY