SoundExchange Calls Webcast Bill Giveaway to ‘Mega-Corporations’
The real beneficiaries of a bill setting webcasting rates below those by the Copyright Royalty Board (WID April 27 p6) are “mega-corporations” like Clear Channel and Microsoft, SoundExchange said Fri. The group, which largely got what it wanted in the March CRB proceeding, called Congress members hypocritical for seeking to overturn the will of a body whose creation they asked for in 2002, the last brouhaha over webcasting rates and cries of imminent bankruptcy.
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SoundExchange is just trying to fracture the broad webcaster coalition supporting the bill (HR-2060), an aide to sponsor Rep. Inslee (D-Wash.) told us, predicting that revenue-specific rates in response to the corporate-windfall objection wouldn’t materialize in bill revisions. Meanwhile, a coalition of webcasters told us its coffers would soon fill with donations in advance of a Hill lobbying blitz.
The Internet Radio Equality Act is pitched in terms of parity -- matching webcasting royalties to the 7.5% rate used by satellite radio as a “transition” through 2010. But Inslee and cosponsor Rep. Manzullo (R-Ill.) also emphasize that the CRB decision imposes rates “at least triple” the current ones. In a joint statement, they said the largest webcasters would pay 300% more and “smaller operations” up to 1200% more. The CRB rates are an “economic chokehold on this emerging form of democracy,” Inslee said. The “unfair” CRB decision “threatens to take it all away,” Manzullo said.
SoundExchange doesn’t plan to push an alternate bill or try to water down the Inslee language, a spokesman told us: “There’s no reason for a [competing] bill.” Congress created the CRB to provide “impartial, objective analysis” and some members appear to be having 2nd thoughts. Noting the alarmist predictions of webcaster bankruptcies that spurred the Small Webcaster Settlement Act in 2002, which divided rates based on webcaster revenue, the spokesman said: “It’s the same story again: ‘The sky is falling.’ The sky is not falling.” Sponsors are subverting “the will of Congress” and treating the proceeding as a “sporting event,” in effect telling the referee “let’s play it over, and change the rules,” he said.
SoundExchange’s corporate-giveaway argument holds no water with sponsors, Inslee aide Jared Weaver said. “I don’t think this is huge money” SoundExchange would lose, he said, agreeing with its estimate of $50 million. Railing against megacorporations is “a little disingenuous,” Weaver said: “I find it funny that the opposition to this bill is defending the rights of those who are most likely to be put out of business” by the CRB ruling. SoundExchange’s statement that the bill is in effect a charge on artists is overblown, Weaver said. Nothing in the bill says artists would have to pay back the retroactive transitional rate from Jan. 1, 2006, Weaver said: “If it’s good enough for the satellite providers, why isn’t it good enough for webcasters?”
Inslee’s bill is meant to be “surgical,” scrapping the CRB decision, not starting from scratch with webcasting-rate distinctions, Weaver said. The CRB decision was “poorly drafted” and showed a “clear lack of independent thought,” he said -- the board adopted SoundExchange’s proposals “verbatim” and failed to “split the difference” as rate- setting bodies typically do.
The CRB and SoundExchange didn’t make a revenue distinction in proposed rates, either, Jake Ward of the SaveNetRadio Coalition told us from New Orleans, where the coalition is pressing musicians at Jazz Fest 2007 to lobby their legislators. Large webcasters can “generally eat” the rate increase, but it will “literally kill” smaller operations. The top 5 online radio destinations would pay 58% of revenue on royalties under the CRB ruling, Ward said. He didn’t know which of the coalition’s members might be in private discussions on rates with SoundExchange, and said SoundExchange hadn’t approached the coalition itself for discussions. The coalition didn’t work with bill sponsors on language but Ward said members were “very pleased” with the bill’s “structural solution.”
The bill has been referred to House Commerce and Judiciary committees, and Telecom Subcommittee Chmn. Markey (D-Mass.) is on record as criticizing the CRB decision, Weaver said. Inslee is on Telecom as well. House IP Subcommittee Chmn. Berman (D-Cal.), an entertainment industry ally, probably wouldn’t take up the bill, Weaver said, but “we'd hope he'd use our bill as an outline” for any Judiciary version. Sponsors are working under the assumption that the U.S. Dist. Court, D.C. -- to which the CRB decision has been appealed -- won’t stay the rates beyond May 15, so time is crucial, he added. “There’s no such thing as the perfect bill” but “we think we have a pretty good coalition” backing this bill’s tenets.
Responding to SoundExchange questioning SaveNetRadio’s financial backing and whether it’s a front for large webcasters, Ward said the group received “seed money” from the Digital Media Assn. (DiMA), representing Yahoo, AOL and RealNetworks. DiMA couldn’t be reached for this article. But Ward said he expects broad donations from webcasters, artists and labels “in coming days and weeks,” once the coalition’s online donation tool goes live: “This is in every sense of the word a national grassroots campaign.”