Big broadcasters don't want their streams taxed off the Net either, it turns out. Here's a progress report on this and other developments in the fight to save Internet broadcasting in the U.S.
By Doc Searls
The National Association of Broadcasters (NAB), holding its annual radio meeting in Seattle, has filed a motion with the U.S. Copyright Office asking for a limited stay on webcasting royalties for licensed broadcasting facilities, pending an appeal. (The document is available in .pdf form from the NAB site: see "NAB's Filing for a Stay on Streaming Fees" under "Latest News") Joining in the motion are Bonneville, Clear Channel, Cox, Emmis, Entercom, Salem, and Susquehanna -- all major commercial broadcast groups.
Those royalties are blamed for current die-off of internet broadcasting, whose population can roughly be divided between the terminal and the departed. Both populations include licensed over-the-air stations as well as independent internet-only broadcasters. This latest motion is by the former, who claim they should be exempt from the fees.
Some background.
The royalties were originally developed through a Copyright Arbitration Royalty Panel (CARP) process that was required by the Digital Millennium Copyright Act (DMCA) The CARP was intended to create some kind of agreement between webcasters and the recording industry. The Panel was convened in 1998 and delivered its recommendations early this year. It described a regulatory regime so costly in royalties that it amounted to an eviction notice to everybody in the business, including licensed over-the-air stations.
Registrar of Copyrights Marybeth Peters gave hope for relief to webcasters in May, when she issued an order rejecting the CARP's royalty recommendations. A final determination of rates by the Librarian of Congress in June, however, overturned that order. The new royalty regime became law in July. It called for the first payments to be due in September, with fees retroactive to October 20, 1998.
The motion was delivered to Marybeth Peters on Wednesday, 9/11. It claims that broadcast stations should be exempt from royalty fees while an appeal is pending in the Third Circuit Court of Appeals. That appeal, the motion says,
"...will determine whether or not an FCC-licensed broadcaster's simultaneous, nonsubscription, digital transmission over the Internet of its AM/FM broadcast signal ("AMFM Streaming") is exempt under Section 114(d)(1)(A) of the Copyright Act from the limited digital sound recording performance right provided by Section 1066(6) thereof... Thus, the issue at stake is not how much, or the terms under which, radio stations should be paying royalties for engaging in AM/FM Streaming. Rather, the issue is whether or not stations engaging in AM/FM Streaming are subject to the digital sound recording performance right at all."
The key word here is "performance" -- the term used by the DMCA to describe the nature of an Internet stream. A stream is not, according to this new copyright law, a broadcast in the customary sense. Guided by this definition, the CARP decided that the supply side of streamed performances owed royalties for the privilege of streaming them, much as any performance venue owes money to the artists who perform there for paying customers. It's a ludicrous concept with no basis in known business reality (listeners don't pay to hear commercial radio, for example), but it served as the basis for taxing away a whole business category -- one pioneered by resourceful operators who make extensive use of Linux and other forms of free and open source software. (Hence our interest in the matter.)
So what will this bit of legal wrangling do for innovative pioneers like KPIG? And where does the Internet Radio Fairness Act -- the Boucher Bill -- play in this drama?
Our primary source for answers to these kinds of questions is Bill Goldsmith, KPIG's hacker-in-chief, and proprietor of Radio Paradise, his own landmark Internet-only station. KPIG and Radio Paradise run their operations and their streams on Linux and other free and open source software. Bill is also working with Jeff Gerhardt of The Linux Show to make those hacks more widely available. (Stay tuned: we'll have news on that one shortly.) Here's what Bill says about these latest developments:
If the NAB motion is granted, it will help bolster the growing perception of the CARP decision as a flawed one - but I don't see it doing much good beyond that. All that the NAB motion asks for is a "stay of execution" on the fees. KPIG, and other broadcasters who have pulled their streams, will still have uncertainty regarding the fees hanging over their heads. Resolution of the issue will simply be postponed - again.
In any event, it's not like the RIAA or SoundExchange was going to start sending out bills in October, anyway. They are far, far, away from being in a position to accurately determine who owes what, due to the incredibly complex reporting procedure that they themselves insisted upon. What will be happening in October, barring some sort of intervention, is that SoundExchange will then be faced with the task of extracting huge volumes of log data from all of the stations, which will have to be thoroughly processed before any billing can take place.
So there's no pressing need for relief from immediate billing. I understand how the NAB motion could lay the groundwork for future court challenges, and it will have a definite impact on perception of the CARP ruling on Capitol Hill & in the press. But it probably won't have much impact on the decision by KPIG's owners to pull the streams until they know exactly what they'll need to pay & figure out where the money is going to come from.
Plus, most everyone I talk to expects that the motion will fail, anyway.
As for the Boucher bill, it would not only put a freeze on the implementation of the CARP decision, for *all* webcasters (the NAB motion of course only affects terrestrial broadcasters) - but it would send a very strong message to the Copyright Office that the public interest requires a very different decision than was rendered last time.
Dean Landsman, a veteran radio station owner and programming consultant, weighed in with this:
Let's go back to the DMCA, which started this mess. Effectively the DMCA legislated usage of bandwidth as though it were [radio] wave spectrum, overlooking an inconvenient fact: terrestrial broadcasting is location-specific, while broadcasting on the Net is not.
There is no FCC involved here. No “InterNet Communications Commission.” Although regulation of telecommunications and bandwidth falls under the jurisdiction of the FCC, there are no provisions for licensing or regulating Web sites. The DCMA is easily interpreted an insidious first step in an attempt to create a regulated Net environment. But it still fails to comprehend what it attempts to regulate.
Over the air, a signal carries just so far, no matter how big it is. Over the Net, every signal has worldwide coverage. There are no 50,000-watt giants. A station's "power" is a matter of capacities: number of streams, bits per stream and similar variables. The threshold of huge is very low. Anybody can play. It's the Way of the Web. But that's not the Way these guys know.
Case in point. The original WOLF was a landmark Top 40 station in Syracuse that in its best years put out a 250-watt signal at 1490 on the AM dial. You could barely get it in the next county. Today the Internet station WOLF-FM plays Top 40 hits for anybody in the world with a streaming audio client, and has thousands of listeners every day. But our regulatory system here in the U.S. (and elsewhere as well) is built only to contemplate stations like the old WOLF, not WOLF-FM.
There are ways of fighting the old system, but you have to be extremely creative. Ted Turner, for example, solved the signal range problem by putting his little UHF station -- Channel 17 in Atlanta -- on a satellite that distributed its video to every cable system in the Country. The old Channel 17 eventually became the TBS network. CNN and other innovations followed. Everybody said stuff Ted was doing couldn't be done. But Ted did it anyway. While the mainstream broadcasters saw cable as an annoyance and a threat, Ted saw it as an opportunity. And he leapfrogged the coverage limitations of all his competitors.
Today's netcasters are following in Ted's footsteps. The difference is that Ted took advantage of loopholes *inside* a system that he understood better than any regulator, or any competitor -- while his netcasting followers today are going *outside* that system.
The Net transcends any regulatory regime. Yes, lawmakers and regulators are doing their best to make life miserable for netcasters, but it's not like there are no alternatives. Netcasters don't have to put up with it. They can just move their transmitters offshore, like pirate radio broadcasters did in the U.K. when the government still didn't allow commercial broadcasting. It took many years, but after a protracted battle of regulation versus popular sentiment, the BBC finally opened up to commercial and alternative broadcast entities. The Pirates died, but scored a pyrrhic victory.
But that battle was fought on Earth. The Net is another world. An offshore streaming server is no less accessible to those using the Web than a domestic one. It's just less vulnerable to domestic regulation. Unfortunately for domestic licensed netcasters represented by the NAB and its motion to stay royalty fees, going offshore isn't much of an option. They're still nailed to the ground here in the U.S. If they'd had any brains they would have fought the DMCA, and taken sides against the RIAA in the CARP proceedings. You'd think with their passion for deregulation they would have been on top of that one, but they weren't. Of course, these aren't really entrepreneurs. They're exploiters. Case in point: the AM facility that was once the much-loved WOLF is now an outlet for a network arm of the burgeoning behemoth called Radio Disney. Local origination is approximately zero.
Meanwhile, the RIAA, the MPAA and their legislative tools remain blind the obvious: A server in Niue, Tuvalu, The Falklands, Fiji, Costa Rica -- or any of a zillion other places outside the U.S. -- can broadcast music (or whatever they like) without paying a dime to anybody.
The Internet's broadcast commons remains a vast and profoundly level playing field, regardless of how hard governments and powerful industries try to fence it off in the U.S. (or China, or any other Net-hostile government). U.S. legislators and regulators haven'tyet learned how to play in this new commons -- which is by protecting it, not by protecting its clueless enemies.
Smart netcasters are light years ahead of their nemeses. There may be a die-off today, but you can bet your next paycheck that lots of netcasters are already setting up operations offshore. And they're doing it cheap, so you can bet Linux is involved. In time they'll demonstrate what Rush Limbaugh and other free-enterprise-loving republicans have been saying for years: big government and big regulation is not only bad for business, but drives the best businesses offshore. I'm only surprised that Rush keeps missing this sitting-duck opportunity to bash Hollywood for its hyperprotectionist regulate-at-all-costs mentality. Then again, Rush is part of a network conglomerate. His flagship is WABC, the Disney-owned and operated station in New York City.
True, netcasting isn't much of a business yet, but in time it will be. Serious netcasters are going to want to make money, and they'll be very inventive and resourceful about it. They'll also be much more friendly to the sources of their goods than the RIAA or the Big Five record companies ever were. The opportunities for market symbiosis are too huge to ignore, especially given the old industry's legendary shaft-the-artist legacy.
All victories won by the RIAA and the MPAA on behalf of the artists they claim to represent will be hollow. That goes for the DMCA, the CARP royalties, and even for this motion by the NAB, if it succeeds. The victories won by independent netcasters on behalf of those same artists will be meaningful and lucrative for many in the long term. Those victories won't happen tomorrow, but they *will* happen.
We can also expect a shift in the argument from bullying by the RIAA to privacy issues surronding government intrusion on the behalf the record and movie industries. Constituents care less about intellectual property rights than they do about “Big Brother” intrusively watching what Joe Sixpack is surfing.
Many of the legislators who were happy to go with the RIAA and MPAA lobbying flow will start backing off when their constituency starts to care about the Big Brother issue. Entertainment industry lobbying that gave us the DCMA and the CARP railroad both took place away from the public eye. Average Janes and Joes still haven't heard about DCMA or CARP, and what they've done to the Inernet's radio dial. Even the Napster debacle went unnoticed by the vast majority of voters.
But when the government wants to build snoopware in every user's PC, it's not going to sit well among usually passive and uninvolved voters. When that happens, the best we can hope for is a return to the unregulated Eden in which Internet radio was starting to flourish. The questions then will be, How many good domestic stations are too dead to revive; and How many offshore stations will bother coming back?
Which brings to mind the Gandhi quote so often applied to Linux:
"First they ignore you.
Then they laugh at you.
Then they fight you.
Then you win."
But we're clearly still at the fighting stage. Knowing the ultimate outcome doesn't reduce the need to fight.
For more information on the progress of the motion, plus other issues surrounding Internet broadcasting, visit RAIN, Kurt Hanson's Radio and Internet Newsletter.
And if you have any information about webcasters going offshore (especially if the stories involve Linux), please write and tell us about it.
Doc Searls is Senior Editor of Linux Journal.