FMC has been following the back-and-forth about webcasting royalty rates almost as long as webcasting has existed. We’ve always recognized the value of smaller online broadcasters to the online music world — their passion and energy mean an awful lot of music that would otherwise have no outlet can reach ears around the world. We also support the continued development of larger webcast services, particularly the ones with innovative technology that conforms to your personal taste, like Pandora. On the other hand, we believe that artists should be fairly compensated for their work, and that the success of new technologies can’t come at the expense of creators’ interests.
Unfortunately, there have been a few roadblocks on the webcasting highway. Back in March 2007, after a lengthy proceeding, the Copyright Royalty Board (CRB) —a government body responsible for setting royalty rates — set a rate scheme for webcasts that many online broadcasters claimed would force them out of business. In our response to the 2007 CRB decision, we “urge[d] the parties to work together to strike a balance that recognizes the value of webcasting, but also properly compensates artists, performers and labels for uses of their work.”
Those parties — which include labels, artists and big and small webcasters — have been involved in negotiations to find a royalty rate that would do just that. But with the 110th Congress about to wrap up, even if an agreement was reached, it couldn’t be implemented until the next session convenes.
The Webcaster Settlement Act of 2008 (H.R. 7084) — which was passed by the House of Representatives on September 27 — permits the implementation of a settlement agreement, should one arrive. Its passage will hopefully allow room for productive solutions that would be of benefit to artists, copyright holders, web broadcasters and, ultimately, listeners.
On a related note, FMC reiterates its call for a public performance right for terrestrial radio. We have a fact sheet that explains the issue in depth, but here’s the quick ‘n’ dirty version: when Sinead O’Connor’s version of “Nothing Compares 2 U” is broadcast on the web, both the songwriter (Prince), and the publisher are paid. So are the performer and the label. But, when traditional radio broadcasts the same recording, only the Prince and his publisher receive a royalty.
While no one would deny the Purple One’s his due, Sinead’s voice certainly had a lot to do with the success of that recording. Why shouldn’t terrestrial radio compensate the performer who helped make the song a hit? There’s also the question of consistency. The lack of a performance right for broadcast radio creates inequalities between traditional broadcasters and webcasting. Why should terrestrial radio have the competitive advantage when both stations are competing for the same listeners?
FMC is pleased that the House realized the importance of these negotiations and the need to implement any agreement reached. We hope that the Senate will do the same. And, now that Congress is paving the way for implementation, we hope that the parties will be encouraged to reach an actual settlement. Stay tuned!