From earlier...


BY KURT HANSON
In a move that appears to have been inspired by webcasters' recent "Day of Silence" and the resulting press coverage and responses from constituents that it generated, the Senate Committee on the Judiciary has schedule a hearing this Wednesday to study what might be the "right" royalty rates for Internet radio.

According to a notice posted today on the Judiciary committee's website: "The Senate Committee on the Judiciary will hold a hearing on Wednesday, May 15, 2002, at 9:30 a.m. in Room 226 of the Senate Dirksen Office Building on 'Copyright Royalties: Where is the Right Spot On The Dial For Webcasting.' Chairman Leahy will preside."

The 19 members of the committee include Chairman Patrick J. Leahy (D-VT) (pictured at left with Secretary of State Colin Powell) and ranking Republican member Orrin G. Hatch (R-UT), plus Senators Edward M. Kennedy (D-MA), Joseph R. Biden, Jr. (D-DE), Herbert Kohl (D-WI), Dianne Feinstein (D-CA), Russ Feingold (D-WI), Charles E. Schumer (D-NY), Richard Durbin (D-IL), John Edwards (D-NC), Strom Thurmond (R-SC), Charles E. Grassley (R-IA), Arlen Specter (R-PA), Jon Kyl (R-AZ), Mike DeWine (R-OH), Jeff Sessions (R-AL). Sam Brownback (R-KS), and Mitch McConnell (R-KY).

"The intent [of the DMCA and its statutory royalty rate] was certainly to help bolster and nurture the Webcasting marketplace and the industry that was just taking off then,'' said one Senate staffer, who spoke on condition of anonymity. "If the result of the CARP process is that the application of those laws is in fact having the total opposite effect that Congress intended... I think it's time for us to take a look at see what is going on."

Testifying before the committee will be at least five speakers, including the RIAA's Hilary Rosen, DiMA's Jonathan Potter, Arbitron's Bill Rose, Billy Straus of Websound (an RIAA-licensed webcaster), and Frank Schliemann of Onion River Radio (a small webcaster featured in a recent New York Times story (here) on the royalty rate issue). According to the press secretary for the Judiciary Committee, other witnesses may also be announced in the next day or two.

The committee is also accepting written testimony from other interested parties prior to the hearing. Webcasters are invited to contact the committee office (202-224-7703) for further details.

The hearing will be open to the public and will be webcast via C-SPAN's CapitolHearings.org.

...

... This would appear to be a major victory for webcasters, as the timing of the hearing — less than one week before the Librarian of Congress's decision on the CARP recommendation is due — is significant. The timing seems designed to permit the Judiciary Committee, if it so desires, to send a clear message to the Librarian and the Copyright Office that the the CARP recommendation is not, in their opinion, consistent with the legislative intent of the law that set the process in motion. That would give the Library of Congress comfort that if they were to modify or vacate the CARP, that action would not be seen by Congress as thwarting the intent of Congress. ...

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BY PAUL MALONEY
It wasn't the point for the webcasting industry and copyright owners to actually resolve their differences at Friday's rountable discussion.

Yet the event highlighted just how far apart sound recording copyright owners and licensees remain. And how formidable a challenge the U.S. Copyright Office still faces in making its final decision on the necessary recordkeeping for those licenses.

The panel discussions were held so that the Copyright Office might better understand the motivation for copyright holders' recordkeeping demands and webcasters' objections to many of those demands. The panels were moderated by Marybeth Peters (right), Register of Copyrights for the Library of Congress, and Copyright Office general counsel David Carson.

Webcasters say they simply don't have the resources to meet reporting requirements...
Representatives of commercial and non-commercial webcasters and broadcasters alike, as well as representatives of other digital music delivery service companies, repeatedly contended that proposed recordkeeping requirements would place an unreasonable burden on their businesses.

Moreover they believe, the amount of data that would end up being sent to the royalty collection agency SoundExchange would overload its resources, making royalty distribution an even more difficult task than the agency currently holds it is.

The copyright owners, as represented by record label and artist organizations (RIAA, AFTRA, etc.), as well as SoundExchange, volleyed back that all of the reporting information they request is necessary. The groups claim this data is needed both for the accurate distribution of royalties, and to monitor compliance with the "sound performance complement" of the DMCA that restricts how that music can be presented.

...Requirements that the RIAA may even agree aren't necessary!
Digital Media Association executive director Jonathan Potter (far left with Yahoo!'s Alex Maghen) represented larger webcasters like AOL and MTV. However, one of his first major arguments of the roundtable was to question the logic of encumbering smaller and non-commercial webcasters, who he said are often more helpful in promoting a wider range of artists and music, with reporting requirements they don't have the resources to meet.

Michael Papish of Harvard University's WHRB, Will Robedee of Collegiate Broadcasters Inc., Joel Willer of KXUL (University of Louisiana at Monroe), and Deborah Proctor of independent non-commercial broadcaster WCPE claimed it would be unfeasible for the stations they represent to gather, process, and report this information as per copyright owners' requests.

(Incidentally, Proctor earned audience howls later when she reminded RIAA lawyers, who had printed and distributed copies of her stations' website as evidence, that her website is copyrighted.)

Labels say "artist, song, album, label" simply isn't enough
Most webcasters (and broadcasters) seemed to agree with 3WK's Wanda Atkinson, Beethoven.com's Kevin Shively, and RadioIO founder Mike Roe (right) who indicated that they are willing to provide copyright holders with up to four pieces of information about each song they play. (They refered to this info as "ASAL" for the artist, the song title, the title of the album on which the song appears, and the record company or label which released the album). With this information, licensees contend, SoundExchange could properly identify the vast majority of copyrighted sound recordings.

The RIAA and SoundExchange insisted it remains necessary for webcasters to supply the eight pieces of information pertaining to each sound recording, plus eight items regarding exactly when and how the recording was used, which they have held all along is necessary for artists and labels to get paid. (In their reply comments, the RIAA withdrew their earlier demand for a "listener log," presumably following cries that they were impossible, and possibly illegal, to comply with.)

SoundExchange counsel Barrie Kessler explained "we don't what you are playing until you tell us...The SoundExchange doesn't have some 'magical' database that can do all of this instantaneously." She went on to suggest software products from third-party vendors as a data collection solution.

Further intrigue: Do you belive in a free ride for NPR and a SoundExchange "mystery" database?
The value of that reported data -- such as the UPC or ISRC codes, catalog number, plus the exact time the performance was made -- was called into question at one point when Potter and Fred "Fritz" Kass of the Intercollegiate Broadcasting System (representing educational broadcasters) revealed to the panel that they had discovered that copyright owners waived reporting requirements in their licensing agreement with the National Public Radio for stations with under ten employees.

A somewhat heated exchange followed between the two and RIAA attorneys Steven Marks (above left) and Gary Greenstein. It was punctuated when Carson stepped in, suggesting that this waiver might undermine the RIAA's and SoundExchange's argument of the value of this information.

"Doesn't that tell us something about how crucial it is to have reporting requirement for the other folks around this table?" he admonished.

Another interesting point was brought up by Wiley, Rein & Fielding attorney Bruce Joseph, in representing broadcasters like Clear Channel and Salem, as well as Sirius Satellite Radio. Joseph (below left foreground, with SoundExchange executive director John Simson and Brian Parsons of Clear Channel left and right background) stressed that broadcasters and webcasters are obligated to provide only enough information that's "reasonably necessary" to identify what sound recordings are played. Distributing the royalties, Joseph contended, was SoundExchange's problem.

"You have your own database to tell you who to distribute to," he said, again suggesting SoundExchange has the necessary information for their purposes after they receive sound recording identification data.

In fact, the existence of a useful SoundExchange database that might be helpful to the industry as a whole for the gathering of copyright information was supported by Barry Knittel of DMX Music (a music subscription service). He claimed his company helped build such a database, and that SoundExchange "is looking to commoditize it."

Will the "ephemeral" requirements vanish?
The most likely change to the Copyright Office's recordkeeping proposal to follow the roundtable discussion is that of records of ephemeral copies -- those copies of sound recording made in the process of webcasting. The Copyright Office had proposed following recording industry and artist requests that webcasters and broadcasters report information on the creation and required destruction of such ephemeral copies of their recordings.

The music services seemed to convince Peters and her staff that reporting on these "valueless" copies was unnecessary, and in the end has no impact on the distribution of royalties. RIAA lawyers argued that since ephemeral recordings helped streaming services, they had value and as such (and as the proposed rule dictates), copyright owners had a right to expect reporting on them.

Marks did admit however it was not yet known how these royalties, called "Section 112" royalties after the clause of the DMCA which deals with them, would be distributed.

In fact, RIAA lawyer Greenstein (right) argued that copyright owners should even collect on songs that are cached but never played! Steven Marks concurred with an analogy of a buffet where "you pay a premium to have everything available to you, though you may not eat everything."

At this point it remains unclear as to what final shape recordkeeping requirements will take. However, comments from Peters did in fact indicate that there is some change in store. "Nothing is set, everything is open," she said in an introduction to Friday's proceedings. "The proposed regulation is not where we'll end up."

Musicians' lobby suggests tiered system for royalties, reporting The Future of Music Coalition, a group that represents musicians' rights in the matters of technology, suggested to the Copyright Office a compromise plan for webcasters and sound recording copyright owners that would create four distinct categories of webcasters -- all with their own characterists and requirements. The group was represented at the roundtable meetings by its executive director Jenny Toomey and technologies director Brian Zisk. A brief synopsis of their ideas was made available at the roundtable on Friday, with their full position to be submitted to next week's Senate Judiciary meeting on the matter. From the FOMC website: "It is critical to recognize that there is no single definition of a 'webcaster.' Rather, we believe it is possible to place most, if not all, webcasters into one of four classes:  a. Corporate webcasters  b. Small entrepreneur webcasters  c. Non-commercial and community broadcasters  d. Hobbyist webcasters... "The Future of Music Coalition believes there is enough common ground to create commercial, non-commercial, incubator and hobbyist licenses, each with distinct rates and reporting requirements. Terrestrial bandwidth, with its tradition of graded licensing rates, stands as a good model from which to start this work. "We hope that, with the installation of a graded licensing and reporting system, we would create a workable solution that both allows for webcasting on all levels to thrive, while also building new revenue streams for musicians..." The paper (available here), went on to call for more "reasonable" reporting requirements for smaller and non-commercial webcasters, the elimination of the ephemeral recording reporting, and elimination of the rule which requires webcasters to file their reports under the Penalty of Perjury.

BY PAUL MALONEY
A group of 17 members of Congress have sent a letter to Dr. James Billington, Librarian of Congress, urging him to not to allow his decision of whether to accept CARP-proposed webcasting royalties to be affected by voices outside of the formal process.

The letter, presumably written at the urging of copyright owners such as major record labels, was sponsored by Representative Howard Coble (right) of North Carolina. In the letter, Coble wrote, "We strongly believe that process should be respected, and the Library of Congress' review of the CARP recommendation should be based solely on the extensive record before it and not on anecdotal or other information."

Billington and the U.S. Copyright Office have until May 21 to announce whether they will accept arbitrated rates for webcast royalties, or if they plan to amend them or restart the arbitration process entirely.

The letter is in response to the "Hill walk" staged Thursday by representatives of independent webcasters, who spent the afternoon meeting with congressional staffs in an effort to educate and entreat their help in saving their industry from onerous proposed royalties and reporting requirements.

The Internet radio industry on May 1st staged a "Day of Silence" which helped bring attention to the fact that webcasters believe if the CARP-proposed licensing royalties go into effect, it will drive the majority of their industry into the ground.

On April 23, a letter sponsored by Representatives Jay Inslee of Washington, Chris Cannon of Utah, and Rick Boucher of Virginia was sent to the Librarian expressing that the arbitration panel's decision would NOT accomplish the Congressional mandate of the DMCA, and would in fact drive most webcasters out of business.

"Congress intended the statutory license process to be fair and efficient," the letter reads, "so that the webcast industry -- both Internet-only programming and terrestrial radio retransmissions -- could be free of legal uncertainty, grow quickly and pay creators increasing amounts as the industry developed." (Please see RAIN coverage here).