PARTIES CRITICIZE ROYALTY RATES, RELIANCE ON RIAA/YAHOO LICENSE
Copyright owners, Webcasters and broadcasters blasted Copyright Arbitration Royalty Panel (CARP) report setting rates of $.07 per performance of streamed radio broadcasts (CD Feb 21 p8). In separate petitions seeking modification of CARP report, all parties characterized rates as unreasonable, albeit for different reasons. They also assailed panel’s decision to base its rate structure on RIAA’s licensing agreement with Yahoo.
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CARP report frustrates Congress’s goal of ensuring that copyright owners and performers receive fair market value compensation for Internet transmissions, RIAA and other content owners said. Instead, they said, report “stands for the disturbing principle” that Webcaster rates and terms should be “tied to those rates and terms that are least favorable for copyright owners and performers” negotiated against backdrop of compulsory licenses. While panel was correct in considering agreement with Yahoo, RIAA said, it also should have taken into account other 25 existing contracts between Webcasters and RIAA, as well as 115 agreements negotiated by individual record companies. Had it done so, RIAA said, it would have found that appropriate range of rates for Internet-only transmissions should be between (a redacted number) and $0.4 cents per performance.
Webcasters faulted CARP for setting royalty rates that “value the sound recording performance right at a level that is, on a per-performance basis, some 7 times higher than the fee for the corresponding right to perform musical works that is triggered by the identical usage of a sound recording.” Webcasters forced to pay CARP-ordered rates, they said, would wind up paying “well over 100%” of their gross revenue in some cases. In relying only on RIAA/Yahoo license as benchmark for what willing Webcaster “buyer” would pay for copyrights in issue, Webcasters said, CARP “violated virtually every one” of criteria it had set for making that assessment by: (1) Failing to acknowledge that “seller” in Yahoo agreement was RIAA: “[A]ssuredly the hypothetical free market unconstrained by a compulsory license is not one in which one finds a single collective licensing agency, such as RIAA, as the sole seller. (2) Using as hallmark agreement that didn’t involve diverse buyers and sellers. (3) Ignoring fact that willing buyer/seller rate was one to which most buyers and sellers would agree, not just one to which one buyer consented. (4) Using Yahoo agreement despite finding that it should be viewed with caution because it was negotiated in “newly emerged industry” and involved “newly created rights” arrived at without “benefit of established historical standards.” Their evidence, they said, supported per-performance rate of $.02-$0.043.
Broadcasters complained that CARP rates for streaming broadcasters were 3-1/2 times higher than corresponding musical works performance rights fees that were best available benchmarks for sound recording public performance royalties. Viewing issue “most conservatively,” they said, simulcasting rates should range between $.008 and $.02 per performance.
Replies to the 3 complaints are due in about 2 weeks.