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internet
law
Stations
to pay
fees for Internet broadcasting
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By
Matt Richtel
New York Times
Radio stations
that make their broadcasts available on the Internet must
pay fees to record companies, the U.S. Copyright Office has
ruled, in a decision that the radio stations assert conflicts
with federal law.
The ruling, to be published on Monday, does not specify how
much the fees are or when the radio stations must start paying
them. But it does lend clarity to a several-year-old dispute
over whether federally licensed radio stations that put their
programming on the Internet are subject to the same "performance
rights" fees as Internet-only radio stations.
And it provides a victory both to Internet-only radio stations
seeking to compete against traditional stations, and to the
record companies. As part of an overall strategy to cope with
dramatic changes to the music industry brought on by the Internet,
the record companies have lobbied for the fees to cover traditional
radio stations.
Presently, record companies collect fees from several hundred
Internet-only radio stations - which create programming exclusively
for online distribution - said Hilary Rosen, president of
the Recording Industry Association of America, which represents
record companies. Rosen declined to disclose the levels of
the fees, adding that the organization "looks forward" to
negotiating rates with the traditional broadcasters.
Should the negotiations fail, the Copyright Office ruling
sets a timetable for arbitration that will determine the amount
of fees to be paid not just by traditional radio stations
but also by thousands of Internet-only radio stations that
have not yet reached deals with the record companies, people
within the industry said.
All stations must pay royalties to composers and performers.
Under a 1995 law, licensing fees are also due to copyright
holders, such as record companies, when their works are distributed
in a "digital audio" format.
However, the National Association of Broadcasters, a radio
industry lobbying group, asserts that the federally licensed
stations are exempt from paying such fees.
The group contends that, under federal law, radio stations
do not have to pay fees to record labels when they broadcast
over the airwaves and that such an exemption also covers the
simultaneous broadcast of the same programming over the Internet.
Earlier this year, as the dispute took shape, the National
Association of Broadcasters sued in U.S. District Court in
New York asking the court to declare that broadcasters are
indeed exempt from the fees. The court has yet to render an
opinion.
Edward O. Fritts, president and chief executive of the trade
association, said that the decision by the Copyright Office
would force traditional radio stations to pay costs that their
business plans had not accounted for. "They are trying to
impose new fees on existing businesses," he said.
"This ruling is directly contrary to existing federal law,"
Fritts said in a statement. "That's why NAB has asked a federal
district court in New York to settle the issue."
Meanwhile, members of the Internet-only radio industry hailed
the ruling. Jonathan Potter, executive director of the Digital
Media Association, a trade group representing Internet music
and media companies, said the ruling would make it easier
for the tens of thousands of companies that create radio for
the Internet to compete against traditional radio stations.
"The decision ensures a level playing field between Broadcasters
and Web-casters," he said.
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