Like most monthly magazines, we have a three-month lead time. So we pick "Stop the Presses" topics carefully, reporting news items that are not only current, but likely to remain relevant three months hence. Yet every once in awhile news currents do a complete reversal. The relevance may remain high, but the news itself changes completely. That's what happened this month, when we regret to say that the good news we reported last month --- that the Register of Copyrights and the Librarian of Congress had shot down CARP recommendations that would have put nearly all U.S.-based webcasting out of business -- was proven false one month later. The first order now looks like it was only a stay on the execution of Internet radio.
It said this:
On May 21, 2002, the Librarian of Congress, based upon the recommendation of the Register of Copyrights, issued an Order rejecting the Panel's determination proposing rates and terms for these licenses. In such cases, the law provides that the Librarian shall issue his final determination within 30 days of his decision to reject the Panel's proposed rates and terms. The final determination is due on June 20, 2002.
We weren't the only ones to report this Order as good news for Internet radio. Just about every analyst and editor agreed. The lone exception was Jonathan Peterson in Way.Nu:
While good news for webcasters, I wouldn't be breaking out the champagne just yet. You can damn well bet that RIAA and the labels are already filling up Congresscritter appointment books to apply some pressure.
He was right.
When June 20 rolled around, and the final "Webcasting Determination" from the Librarian of Congress <http://www.copyright.gov/carp/webcasting_rates_final.html> came out, there was widespread shock. The document seeme to have been written entirely to slip through a loophole in the order issued one month earlier. The opening sentence reads,
The Librarian of Congress has accepted the recommendation of the Register of Copyrights and rejected the rates and terms recommended by a Copyright Arbitration Royalty Panel (CARP) for the statutory license for eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions ("webcasting") under 17 U.S.C. §114 and the statutory license to make ephemeral recordings of sound recordings for use of sound recordings under 17 U.S.C. §112.
The italics are mine. U.S.C. §114 refers to the Digital Performance Right in Sound Recordings Act of 1995. U.S.C. §112 refers to the Digital Millennium Copyright Act of 1998.
So the CARP determination stands, except for the rates and terms. These were changed from $.0014 for each stream sent to each listener of a given recording by an Internet-only station to $.0017 for the same. Noncommercial simulcasts were held to $.0002 while noncommercial side channel transmissions were also reduced from $.0014 to $.0007. "Performance fees" were cut from 9% to 8.8%. The minimum fee for business establishement service (background music such as Muzak) was raised from $500 to $10,000.
The rates are also retroactive to October 28, 1998.
That means a station with 2000 listeners per hour, playing 18 songs per hour, at 0.07¢ ($0.0007) per song per listener per hour, woud owe $604.80 per day, or $220,903.20 per year:
18 x $.0007 = $.0126 per listener/hour
$.0126 x 2000 = $25.20 for 2000 listeners in an hour
$.31752 x 24 = $604.80 per day
$2.419655 x 365.25 = $220,903.20 per year
Digitally Imported Radio <http://www.digitallyimported.com/> (which streams out of BSD servers, keeping stats with Linux-based software) averages over 4000 listeners per hour to its trance channel alone. RadioParadise, which streams over Linux and is entirely built with open source software, has around a thousand listeners per day. RadioParadise also has the same business model as public radio and television: listener contributions. At last report these ran around $3000 per month, which barely covers the station's overhead.
Add that back to '98 and some of these stations could easily be owing many hundreds of thousands of dollars.
Whatever the reasoning, the Librarian's determination serves as a scheme for bankrupting Internet radio's pioneers, taxing dozens of thousands of stations off the air, and restricting the Inernet's broadcasting commons to occupants with pockets deep enough to stake fresh claims there.
At this writing, countless stations are already off the air. But many more are pressing on and fighting the ruling. We'll keep you posted on the current news at our Web site. <http://www.linuxjournal.com>
-- Doc Searls
What thinking could possibly have justified these rates? Here's the Librarian of Congress again: