Last year a raging battle ensued over the performance royalty rates for internet radio. That battle continues even now. The entity that established those rates is the Copyright Royalty Board (CRB).

The CRB is now preparing to adjust and establish mechanical royalties that would be paid to publishers and songwriters for the sale of both physical products (CDs) and downloads (both full tracks and ringtones).

ASCAP has sent out a letter to it’s members raising awareness that we are about to witness another fight over royalties. This times the team members will be a little different it seems. According to the ASCAP letter, the RIAA and the DiMA will be joining together to petition the board for lower rates. These two entities have been bitter enemies in the past.

Our friends at The National Music Publishers’ Association (NMPA) will be representing the mechanical right interests of songwriters and music publishers in this hearing. They will be fighting vigorously to protect those mechanical right interests to ensure that musical compositions are compensated fairly. On the other side of this fight stands the Recording Industry Association of America (RIAA) and the Digital Media Association (DiMA). Both the RIAA and DiMA have proposed significant reductions in mechanical royalty rates that would be disastrous for songwriters and music publishers.

The letter continues to give details about the proposed rates for the various types of sales. The RIAA is proposing a rate of 6 cents per track for physical sales, that’s a reduction from the current rate of 9.1 cents. Digital downloads are where things get really bitter though. The RIAA is suggesting a rate of 5 to 5.5 cents per track while the NMPA wants the rate set at 15 cents “because the costs involved are much less than for physical products.”

Streaming services is another battle. The NMPA wants to collect 12.5% of revenue, 27.5% of content costs, or a “micro-penny calculation based on usage,” whichever is greater. The RIAA, on the other hand, is suggesting .58% of revenue, and the DiMA says zero for streaming services.

Clearly the songwriters do need to be compensated for the use of their creative works. Without quality songs, where would the music industry be? They deserve to be paid in the same way that you or I expect to be paid for work we perform for an employer.

It seems that each organization wants their slice of the pie to be the biggest. The problem is that the pie (income from the sale of music) appears to shrinking. Maybe someone should devote some time to discovering a new way to make money in the music business. Otherwise, everyone will be fighting over a cookie instead of a pie.

With controversy and legal action still taking place over the rates set for internet radio, the Copyright Royalty Board has fixed new rates for satellite radio services. Since there are only two satellite providers in the US, Sirius and XM are the only companies affected by the ruling.

The two satellite radio services have been given an entirely different deal than that handed down for webcasters. While internet radio was burdened with a per song fee, satellite radio has been given a favorable percentage of revenue model to work from.

These fees are the ones paid to SoundExchange for performance royalties. They are paid in addition to publishing royalties owed to such organizations as ASCAP.

Here is the fee structure as set by the CRB: (more…)

We covered this issue in some detail in the past, with a good deal of discussion taking place in the comments (here and here). The issue seems to have slipped off the radar lately, but the debate continues in the background.

Just recently, the US Court of Appeal for the District of Columbia set dates for briefings related to appeals filed by webcasting groups unhappy with the rates set by the Copyright Royalty Board for internet radio royalties. Briefs are due February 25 (2008) for the webcasters, April 25 for the CRB, and May 15 for SoundExchange. Reply briefs will be due on June 12. The court has yet to schedule oral arguments in the case.

With a summer break for the court and the length of process involved in a case like this, it is likely we won’t a see a decision until late 2008 at the earliest.

There has been at least one settlement announced, concerning the case, at this time. The settlement limits the minimum fee for multiple channels (streams) to $50,000 per company. This is welcome relief for businesses such as Pandora that allow each individual listener to create their own channel, resulting in millions of channels for which they would have been charged under the initial CRB decision.

It is possible that other settlements could be reached outside of court, rendering theses appeals unnecessary. Barring that, it looks to be a year or more before this issue is settled. In the meantime, be sure to visit your favorite bluegrass internet radio station and enjoy the music.

With the July 15th deadline for the new internet radio royalties fast approaching, webcasters were starting to despair. But they are breathing easier today. Yesterday, at a congressional hearing, Jon Simson (executive director) of SoundExchange promised that the new rates would not be enforced (report via Wired.com). Internet radio will stay online as the two sides negotiate new rates.

One of the major issues with the new rates has been the per station minimum fee of $500. This would have been a HUGE expense for such webcasters as Pandora, Live365, and other multicasters who allow custom stations for every listener. These minimum fees are now off the table, and will be replaced by a system in which per-station minimums will be capped at $50,000 per year.

While this may all sound like good news, some of the wording I’m reading in conjunction with the announcement is somewhat troubling. Take this statement for instance.

SoundExchange and the webcasters that were part of the Copyright Royalty Board hearings are going to have another chat about the rates.

Does this mean that webcasters who were not a part of CRB hearing will still have to pay the new rates (minus the minimum fees)? Or, spared that, will they be invited to participate in this new round of rate negotiations?

One thing that seems clear is that the Copyright Royalty Board has cut itself out of the loop. The board’s refusal to a rehearing has left the continuing process to SoundExchange and the webcasters directly. If the two parties can go forward free of the royalties being collected, they may be able to come to some sort of agreement that works for everyone. After all, webcasters do need music to play, and artists need someone to play their music so fans will hear it. It seems there should be a way to work this out that benefits everyone involved, including the consumer.

Congress, it seems, will be watching the negotiations as they unfold. And the current situation does provide Congress with the time to debate the Internet Radio Equality Act (links to pdf), which would set royalties at 7.5% of revenue for webcasters, a rate very much like what they operate under presently.

Is internet radio saved? Not yet. Not until the negotiations produce a royalty rate that works in the real world for both parties. But it seems internet radio won’t die this weekend, as had been the fear prior to yesterday’s announcement.