Coburn on Internet Radio Equality Act

A week or so ago, I e-mailed Oklahoma Senator Tom Coburn through his website regarding the Copyright Royalty Board's decision to raise royalty rates on Internet webcasters, retroactive to 2006, a decision that endangers small Internet-only broadcasters as well as on-line streaming of over the air content (e.g., WFMU). His reply is below. I appreciate the fact that Sen. Coburn has obviously examined the issue and given it some thought:

Dear Mr. Bates,

Thank you for contacting me with your support for the Internet Radio Equality Act of 2007 (S. 1353). I appreciate your input.

On March 9, the Copyright Royalty Board (CRB) issued a decision that establishes a statutorily mandated standard for royalty rates for commercial and non-commercial Webcasters. The new rates represent an extension of the "willing buyer/willing seller" standard. Under the CRB decision, Internet Webcasters must pay an annual non-refundable $500 fee for a set level of listening hours. Moreover, both commercial and non-commercial Internet Webcasters will be charged 8 cents per song retroactively back to 2006, with the rate gradually climbing until 2010.

The new rate does not include a special exception for small Webcasters. The CRB considered a small Webcasters proposal where the fee structure would be based on total revenues. The CRB rejected the proposals because:

"[S]mall commercial webcasters focus on the amount of the fee, rather than how it should be structured, is further underlined by the absence of evidence submitted by this group to identify a basis for applying a pure revenue-based structure to them. While, at times, they suggest that their situation as small commercial webcasters requires this type of structure, there is no evidence in the record about how the Copyright Royalty Judges would delineate between small webcasters and large webcasters."

As you know, the Internet Radio Equality Act would essentially nullify the CRB's March royalty rate decision and would allow the Internet Webcasters to choose from two payment standards: either 7.5 percent of total revenues received by Webcasters during that year that are directly related to the provider's digital transmissions of sound recordings or 33 cents per hour of sound recordings transmitted to a single listener.

It is my understanding the U.S. Court of Appeals has been asked to review the CRB's decision. I would like to wait until the courts have reviewed the decision before considering legislative action on this issue. I instinctively believe in free markets and competition and a level playing field for all types of radio broadcasts. Government intervention deters risk takers, hoards financial resources and interferes with the efficient allocation of resources. With that said, I believe the best solution to this problem would be for Webcasters to negotiate directly with sound recording copyright owners.

Internet radio, particularly small Webcasters, provide another format for the public to access free music, news and public safety information. I understand the substantial harm these new royalty fees will cause many small Webcasters and that they could potentially put them out of operation. I would like to see a solution to this problem that will allow Webcasters of all sizes to continue streaming their broadcasts over the Internet.

I will closely monitor this issue with your views in mind. Again, thank you for writing me. Should you have any additional concerns, please feel free to contact me.

Sincerely,

Tom Coburn
United States Senator

TC: swm