Internet Radio Bill Would Strip Artist Payments

Proposed legislation that seeks to nullify the March 2, 2007 ruling of the Copyright Royalty Board (CRB) would gut the fair market rates set by the CRB and result in musicians having to return royalty payments they have already received.

If passed, the bill would also result in a windfall of more than $50 million to mega-corporate webcasters like Clear Channel and Microsoft at the expense of recording artists across the country. Because the bill is retroactive, artists would have to write checks to cover refunds to corporations whose CEOs and top executives are paid millions of dollars per year.

"The idea that this bill would help small webcasters or artists is ludicrous since less than 2 percent of all royalty payments in 2006 came from small webcasters," said John Simson, Executive Director of SoundExchange. "The true beneficiaries are the mega-multiplex services like AOL, Yahoo!, Microsoft and Clear Channel, which will benefit from rates substantially lower than those set by the Librarian of Congress in 2002."

This bill, introduced by Representatives Jay Inslee (D-WA) and Donald Mazullo (R-IL), would arbitrarily reverse the painstaking work of the CRB, the three-judge panel created at the request of the webcasters three years ago.

"Because the bill is so heavily favored to enrich the big webcasters, it raises questions as to who is really behind the SaveNetRadio Coalition," observed Simson. "Although this coalition purports to be on the side of musicians, they have come out in support of this anti-artist bill. SoundExchange has reached out to various webcasters to explore ways to accommodate their needs."

The CRB panel listened exhaustively for 18 months to all interested parties, heard from dozens of witnesses in weeks of live hearings, read countless depositions and examined tens of thousands of pages of evidence focused on, among other things, the services' ability to pay and the value of music in the marketplace. In contrast, the proposed bill presents no factual or economic basis for rejecting the reasoned decision of the CRB. This legislation, if passed, would come at the expense of hard-working artists, who, on average, received just $360 each in royalties from webcasting in 2006. "This bill would put at risk the very artists that webcasters purport to care about," said Simson.