Getting back up on my soapbox for a bit….

It’s time to climb up on the soapbox for a bit and talk about the ugly turn
things have taken in the entertainment industry.

We could be a few short days away from seeing the end of one of the Internet’s
most exciting advances - Internet radio. Thanks to the heavy-handed tactics of
the RIAAand the complete
cluelessness of the Copyright Office the majority of Internet radio stations
could face shutdown as early as October. While the issues aren’t simple, there
are a few salient points that will help you understand how we could be so close
to the destruction of a medium that’s so new.

In 1998, Congress passed the Digital Millenium Copyright Act (DMCA). Praised by
the recording industry, this act granted the recording companies the right to
assess royalties for digitally broadcast works. A section of the DMCA granted a
license to digital broadcasters to play these copyrighted works. However,
royalties for these works would be determined at a later date, and would be
retroactive to October 1998.

Notice that the DMCA allows the recording industry to collect royalties.
This differs from the previous standard for traditional broadcast, whereby
composers were paid royalties for their copyrighted works. In other
words, in the traditional model, the person who actually wrote the work was
compensated for someone else’s financial gain in the form of royalties. In the
DMCA scenario, the record companies (the vast majority of which are RIAA
members) collected the fruits of the composers’ works.

When the recording industry and the webcasters couldn’t negotiate a fair royalty

rate, the Copyright Office created a committee to arbitrate. The Copyright
Arbitration Royalty Panel (CARP) was born, vested with the full authority to
settle the royalty rate issue.

In February, CARP ruled that the record companies would receive a royalty rate
of $.14 per song per listener from Internet-only webcasters, though this was
eventually reduced by the Copyright Office to $.07.

The impact on Internet radio is obvious when you consider the small size and low

profits of most webcasters. Consider, also, that the royalty rates are
retroactive to October 1998. At the $.07 rate, a typcial Internet-only webcaster

streaming 15 songs per hour to 1,000 listeners will pay the recording industry
$11.50 per hour for the right to webcast.

That doesn’t sound like much, but let’s put the number in perspective. Using the

same model - 15 songs per hour to 1,000 listeners - our average webcaster will
owe the recording companies more than $250,000 in retroactive royalties. By the
way - these back royalties will be due in full in October.

There are several online efforts intended to make our views on the DMCA and the
recent royalty rate decision known. Among the largest are the Abolish the
Digital Millenium Copyright Act Petition and the fax campaign at Save Internet Radio!.

Let’s look at some other facts. The recording industry under the legislative
direction of the RIAA has already locked down your right to own and share music.

Copy protection on CDs prevents you from copying music for which you’ve already
paid a royalty. The RIAA has, through it’s Southern California Congressional
Representatives, introduced a bill in Congress that would release them from
liability for any damage they might cause your computer or data when breaking
into it on the suspicion that you possess illegally-acquired copyrighted
works. In other words, they may soon be able to hack your computer willy nilly
without fear of liability. Now, using the DMCA, they stand poised to shut down
Internet radio. Ask yourself, “What’s next?”

Folks like you and I have created, nurtured and perfected the technologies that
the RIAA now look to control. We use them daily. How loudly can Penguins roar?
Let’s hope it’s loudly enough to save Internet radio and slow the RIAA.