Hob: Ex Post Facto isn't an issue. The law that created this royalty was passed in 1998 -- Congress just left it to an arbitration panel to figure out the pesky detail of the actual rate of the license. It took this long to figure out -- this being the first time and all -- but everyone who has been streaming since 1998 knew this day would come (streamers were actually supposed to register with the Copyright Office to let them know that they were going to take advantage of the rate; otherwise, they're technically infringing).
machaus: There is no different rate for nonprofit Internet-only streamers, but there is a lower rate for broadcast simulcasters (.07 cents) and an even lower rate for non-commercial radio stations who stream just their over-the-air signal (.02 cents). In a nutshell, non-profit webcasters didn't participate in the arbitration and no one asked for a separate rate on their behalf.
lescour: This rate is to be paid for all copyrighted sound recordings, regardless of whether the artists are signed. The panel designated Sound Exchange -- a non-profit arm of RIAA -- to collect royalties on behalf of unknown copyright owners, and distribute the royalties accordingly. So if you want to get your $$, ask them.
davidmsc: Unfortunately, we're about to start a similar arbitration under the same laws for XM and Sirius. This will hurt them, because it will be used as precedent by RIAA to try to argue that the pre-existing digital audio satellite services (as the statute affectionately calls them) should pay at least this much, if not more.
Quick Copyright 101: Just to be clear about what is at stake here, there are two kinds of copyright embodied in your off-the-shelf CD: (1) the Sound Recording (basically, the embodied performance, like a CD of Whitney Houston singing "I Will Always Love You" -- artist and/recording company owns the copyright) and (2) the Musical Work (the song/composition itself -- think sheet music -- Dolly Parton actually wrote "I Will Always Love You"). There's been a right of public performance for musical works forever, and ASCAP, BMI and SESAC help administer performance rights for those songs, and have since the 1920s. The public performance right for sound recordings was just created in 1995, and even then only for performances by means of a digital transmission. Over-the-air broadcasters only pay ASCAP-type musical works royalties; they don't pay sound recording royalties. Congress' concern was that digital performances would negate the need for people to buy physical copies, cutting off the sound recording owner's income stream, but radio promotes sales of CDs. The rates set by the CARP (Copyright Arbitration Royalty Panel; it should more logically be Copyright Arbitration Royalty Panel but then the drafters realized that wasn't a nice acronym!) are ON TOP of what is already paid for the musical works, and also about ten times higher than the rate paid for musical works. I say the value, at best, should be equal. That's where a lot of the fight is, and will continue to be on appeal. With the rates as set now, a lot of people really will just stop streaming entirely, sorry to say.
Oh, and here's the best part: This rate is only good til the end of 2002. Then we have to start arbitrating all over again for the 2003-04 period. The only plus side is that it keeps me employed. We call it The Lawyers Perpetual Employment Act to comfort ourselves on those late nights.
rcade: Believe me, I am absolutely positive of the impact this will have on the clients who have been paying me to negelct my husband and dog for all these many months. Even those of us working on the case sometimes slip into the vernacular and call it "per song," but in reality listenership plays very strongly into the mix. If you look at the actual document identifying the rates that was issued by the CARP (.pdf) you'll see they label it a per performance royalty.
nothing: The short answer to your question is no. The lawyerly answer is that copyright owners can publicly perform their musical works and their sound recordings to their hearts delight -- the only people they would have to pay is themselves. Just be sure that you as an unsigned band actually own the copyrights! If you made the Sound Recording yourself, then you are the author of the CD. But if it's a cover song, you technically owe the composer a royalty if you stream it. That royalty gets paid either directly to the composer, or to whichever performing rights organization (ASCAP, BMI, SESAC) the composer is affiliated with.
jmd82: Copyright Law has something called the First Sale Doctrine (17 USC Sec. 109). Basically, it says that the physical object the copyrighted work is embodied in (in the statutory language, a "copy" or "phonorecord") is distinct from the copyrighted work itself. The plus side for owners is that selling the physical object does not mean selling the copyright -- you don't buy the copyrights in all the music on a CD when you purchase it, what you are really buying is a copy and a narrow license to listen to the music on demand. The down side for owners is that they can't prevent resale. The problem, as you can now probably imagine, is what happens when the work is digitized, and in effect separated from a physical object.
KnitWit: You ask a good question, and I honestly don't know how that is going to play out (and I am not going to do RIAA's job for them by thinking of creative ways!!). Technically, you can only take advantage of this rate if you filed something with the Copyright Office before you started streaming -- people who don't file are technically infringers, unless they can prove fair use or some other exception. Save your post as proof that you were willing to send a check right away if they ever do come after you. =)
bump: Actually, that's a great question. The issue of whether the record companies even own the copyrights in a lot of sound recordings -- particularly those originally recorded before the late 1970s -- is the elephant in the room that RIAA would rather ignore. The Napster court is finally getting to that issue, and the MP3.com court touched on it as well. It will be fun to watch that one play out!
That would be exactly why we feel the rate set by the panel needs to be overturned. And to be technical, internet-only webcasters will pay .14 cents if this stands, but broadcasters who simulcast their over-the-air stream will pay .07 cents per performance. Even at .07 cents, most broadcasters have publicly said they won't stream on a going-forward basis. The fact that it is a per performance royalty also explains why Live365's math was so different from the math posted by kindall. Live365 has been active in the litigation; they know what's at stake and have the lawyer bills to prove it.
Maura: Thanks! If your station is noncommercial as defined by the decision, you may qualify for the lowest rate -- .02 cents per performance. That's still high, but a heck of a lot lower than .14. If you're affiliated with NPR or the Corporation for Public Broadcasting, you should contact NPR, because they negotiated a separate settlement with RIAA that is presumably even lower than this (the terms of that deal are secret; the other parties to the litigation don't even know them). It is going to be hard on independent stations. You guys should definitely talk to a music licensing lawyer if you can, or maybe NAB or NRB if you are affiliated with either of those.
Willnot: You're right about the musical works performance fees being based on revenue, which is intended to be a proxy for audiuence. One of the big issues throughout the arbitration was whether a revenue-based fee was appropriate in the Internet space, seeing as how webcasters don't really have all that much revenue at present. Another issue was, even if it's revenue-based, which revenue do you count? A percentage of all of AOL's revenue just because once small portion of AOL happens to be Spinner? All of Spinner's revenue or just that which could be directly linked to the music? Because webcasters offer a lot more than just music, it would be difficult to set appropriate boundaries. That's likely why the CARP ended up going with a straight per-performance model. The webcasters made their rate request by converting the royalties paid by broadcasters for muscial work performances to a per-performance number, and assuming that the musical works and sound recordings should be worth about the same. The proposal was 10 times lower than what the CARP ended up ordering.
Kindall: RIAA would like nothing more than for Radio stations to pay the same amount. Unfortunately, they don't have any right to royalties from radio stations, because there is no Sound Recording public performance right EXCEPT when the performance is by means of a digital audio transmission (See 17 U.S.C. Sec. 106(6)). This is why traditional broadcasters want to stay over-the-air and won't go digital any time in the near future.
insomnia_lj: luckily, most college and public stations will be covered by the special NPR deal. I don't know the terms, but assuming it was somewhere near NPR's original rate request -- hell, even if it's double NPR's original rate request -- it's still a heck of a lot lower than what the CARP came up with, and shouldn't put those stations out of the streaming business entirely.
willnot & insomnia both hit major points of what the Webcasters' argument was in this arbitration to begin with. We spent a lot of time and energy trying to show just how much radio (and by extension, webcasting) promotes both more listenership and sales (how many of you have bought CDs you otherwise would never have even heard of? I am guessing a lot). And trying to convince them that it doesn't make sense to put us out of business.
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