Hollywood and their legislative and regulatory sock puppets have been trying to outlaw independent activity on the Net for years. After the latest move by the Librarian of Congress, it looks like they're finally succeeding.
On May 22, Marybeth Peters, Register of copyrights, issued an order rejecting the licensing rates and terms for webcasting that were recommended by the Copyright Arbitration Royalty Panel (CARP) convened in 1998 to arbitrate an agreement between webcasters and the record industry -- an agreement required by the Digital Millenium Copyright Act (DMCA). The rejection was greeted with near-silence by the Recording Industry Association of America (RIAA), which represented one side of the arbitration process, and with delight by webcasters, nearly all olf which were not party to the negotiations, and would plainly have been put out of business by the CARP rates, which would have charged up to $.0014 for every song sent over every stream, to every listener, by every station, going back to 1998. In some cases totals owed would have been a million dollars or more -- for stations with incomes that are tiny at best and generally amounted to $0. Most college stations, already operating on tiny budgets, would be forced to cease webcasting.
The ruling was more than sensible. When I told a former FCC official about the order, he replied, "Did they say it was insane?" That was also the consensus among nearly everybody reporting on the order.
The Register's order looked and sounded final.
a body that that had been convened to , accepted most of those same rates and terms, and the reasoning behind them. While the Librarian cut some of the rates, the effect was the same as the one intended by the CARP: to tax Internet broadcasters off the bitwaves.
Some stations bailed after the CARP rates were first published early this year.
Few Internet radio broadcasters and none of their listeners were parties to these processes, in spite of Congress' original instructions to the Librarian of Congress
(excerpted here; see section 114), Congress instructed the Librarian of Congress, in the absence of a successful negotiation between record labels and webcasters, to set a rate as follows:
"The copyright arbitration royalty panel shall establish rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller. In determining such rates and terms, the copyright arbitration royalty panel shall base its decision on economic, competitive and programming information presented by the parties, including —
"(i) whether use of the service may substitute for or may promote the sales of phonorecords or otherwise may interfere with or may enhance the sound recording copyright owner's other streams of revenue from its sound recordings; and
"(ii) the relative roles of the copyright owner and the transmitting entity in the copyrighted work and the service made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, and risk.
"In establishing such rates and terms, the copyright arbitration royalty panel may" — emphasis ours — "consider the rates and terms for comparable types of digital audio transmission services and comparable circumstances under voluntary license agreements..."
The CARP, and subsequently the Librarian of Congress, ignored virtually all of Congress's instructions.
Instead, the arbitrators decided that if any agreement had actually been negotiated in the relevant marketplace, that would reflect the willing buyer/willing seller price.
In other words, instead of looking at what a willing buyer and willing seller WOULD have agreed on, in a world where willing sellers existed, the CARP chose to simply look at what one grudging seller (the RIAA negotiating as a collective) and one extremely-atypical buyer DID agree on!
(This approach ignores the possibility that the RIAA labels, as a group, were essentially an unwilling seller, licensing their material only because they were required to do so under the DMCA.)
As for all the other criteria that Congress instructed the CARP to consider, the arbitrators glibly wrote in their report, "We would expect these considerations to be fully reflected in any agreements actually negotiated between webcasters and copyright owners in the relevant marketplace."
In reality, however, the considerations Congress asked to be considered were trivial compared to the actual motives of the parties in this deal. (The RIAA was constructing a case for the upcoming CARP, and Yahoo! wanted to squeeze out less-well-funded competitors.)
If I were a Congressman, I'd be FURIOUS right now:
In setting a statutory license designed to encourage the growth and diversity of a new industry, the arbitrators and the Librarian ignored Congress's instructions and used the terms of a deal that was specifically constructed to have the opposite effect! -
That's my take on this. What a fucking bummer.
This is an absolute fuck-you to internet radio, to listeners, to everybody but the record industry. And frankly, it fucks them too. They're trying to extract money from a business that doesn't exist, and denying countless new artists and songs the only place they have access to airplay. Amazing.
The posts are coming in.
Kevin Marks: So, the basic structure still stands, the webcasters are still charged huge back royalties,and they still don't have the freedom to offer interactive programming in any meaningful way. The logic of record companies of paying thousands to get airplay on the radio, but trying extract thousands for wireplay on the net escapes me still.
Tom Poe: This smells BIG TIME!!
B!X shows how it's playing in the mainstream press. Incredibly they're playing it as a "victory" for webcasters because the royalty rate will only be half what the CARP panel originally proposed. But they're still high for most stations, and the reporting requirements, which presumably remain, are labyrinthine and prohibitive. And the technology for keeping those records, of course, doesn't exist.
Make no mistake. This is a death sentence. It's a march off the land these stations alone pioneered and developed. It paves the ecosystem.
Here's what I want to know... What happened between the rejection of CARP a month ago, and it's approval with minor modifications today?
The answer seems to be that the Librarian of Congress is off in the same psychotic territory as the CARP when it contemplates the existence of a market where there is none:
On the recommendation of the Register of Copyrights, the Librarian rejected the CARP©&Mac246;s determination because significant portions of it were arbitrary or contrary to law. Where the Librarian could not accept the CARP©&Mac246;s recommendations, he has adopted rates and terms that are justified based on the evidence presented in the CARP proceeding and the requirements of the law. Otherwise, he has adopted the CARP©&Mac246;s reasoning and recommendations.
The Librarian is required to accept the CARP©&Mac246;s determination unless he concludes that the determination is arbitrary or contrary to the applicable provisions of the copyright law. When aspects of the CARP©&Mac246;s determination are found to be arbitrary or contrary to law, the Librarian may substitute his own judgment for that of the CARP, but he will still give deference to those aspects of the CARP©&Mac246;s determination which were not arbitrary or contrary to law. Applying those principles, the Librarian accepted the CARP©&Mac246;s conclusion that the RIAA/Yahoo! agreement represented the best evidence of what rates would have been negotiated in the marketplace between a willing buyer and a willing seller for a license to engage in webcasting of radio retransmissions and Internet-only transmissions.
The Librarian also accepted much of the CARP©&Mac246;s analysis of how the RIAA/Yahoo! agreement demonstrated the marketplace rate for webcasting rates.
I boldfaced that passage because it represents absolutely specious and wishful thinking on the part of both the record industry and Yahoo, which bought its way into the nonexistent webcasting business by paying $6 billion for Mark Cuban's Broadcast.com and later needed to rationalize the expense.
There may well be a business here in the long run. Listeners pay Bill Goldsmith and RadioParadise for something. I 'm sure Bill would be glad to pay artists some piece of what he gets for playing their records. Composers too. There is enormous intention of good faith toward artists on the part of native webcasters.
But most of those webcasters never got to sit at the CARP table. They were not party to this treaty. They were never wanted. They were always in the way.
By reconceiving broadcasts as "performances" (which they quite obviously are not, no matter how 'perfect' the reproduction may be, which it never is), these co-conspirators (CARP, the RIAA, Yahoo and the Librarian of Congress) effectively clear the landscape of its natural inhabitants and replace it with a whole new business that doesn't exist yet: the public performance business that Hollywood and the record industry feared back in the earliest and wackiest days of the late dot-com boom.
The conspirators no longer fear that business. They just want to continue pretending it will some day exist. They get the upside either way. If it never exists a whole class of bothersome, unregulated and uncontrolled threats is marched out of the way. If it does exist, they've got the land for themselves.
Sound familiar?
Here's what I've written on the subject:, with the most recent items on top:
Tom Rossen, a Chicago programmer and musician, says "I'm willing to bet that most of us who download mp3s would be willing to pay a penny a song (is micropayment is still not ready for prime time?) if we knew it went to the artists and not some suit who ripped off the alienable copyrights for a pittance."
Doc Searls is Senior Editor of Linux Journal. HIs opinions are his own.