[JPL] soundexchange weighs in webcasting/Copyright Royalty Board

OntheBeach at aol.com OntheBeach at aol.com
Fri Mar 23 18:53:39 EDT 2007


Dear SoundExchange Members and Friends: 
I'm writing to tell you about the webcasting decision from the Copyright 
Royalty Board (CRB).  Some people in the webcasting community have 
mischaracterized the decision and its potential impact on the internet and in the press, 
resulting in hyperbolic claims of the demise of internet radio.  To combat this 
misinformation campaign I am asking for your active support through letter 
writing, contacting Congress, blogging and speaking out.   
On Friday, March 3rd, the CRB issued its ruling regarding rates for 
webcasting and simulcasting for the period 2006-2010. The three judge panel considered 
testimony from 66 live witnesses and reviewed thousands of pages of documents 
relating to the economics of internet radio and online simulcasts. After 
considering arguments and proposals from everyone who had an interest in these 
proceedings, the judges issued a highly detailed, 115 page decision.  The CRB 
determined that the per stream rate will be raised by roughly 5 percent from the 
2005 level for 2006. The CRB then increased the rate going forward each year 
through 2010. 
The CRB's decision was validation of three basic principles: 
1. The music industry is changing, dramatically.  What was once a CD-only 
business has evolved into a multi-platform consumer offering – from streaming to 
cell phones to mp3 players and more.   With these changes come new challenges 
to assure a fair and competitive marketplace. 

2. Webcasters and simulcasters are in the business of providing a product – 
music –to consumers.  The people who create the product - the artists and 
labels - should be fairly compensated in a manner that reflects the value of their 
3. All the participants in these proceedings are interdependent.  We are all 
in this business together.  One can't succeed without the other.  Assuring 
fair treatment for all stakeholders in this dynamic landscape is critical. 
It is disconcerting to see some of the mischaracterizations that have been 
floated around the internet and the press in the wake of the decision.  These 
initial stories, promoted by a disgruntled minority, misrepresent the nature and 
economics of CRB's decision.  Fanning the flames of this misperception are 
people and organizations that participated in the hearings before the CRB.  They 
provided witnesses and economic analyses as well as their own testimony. 
Ironically it was the webcasters and simulcasters who argued back in 2002 
that they didn't have enough access to the original rate setting proceedings 
(known as the "CARP") and therefore requested a new system to set future rates.  
It's a little disingenuous to cry foul when they asked for a new system, 
welcomed it and participated fully in its proceedings.  When they got the increased 
discovery procedures they asked for some webcaster participants promptly used 
it to harass any artist willing to step forward and ask for fair royalty 
rates. For instance, some of our artist witnesses were asked to provide 7 years of 
tax returns and every single record deal they had ever entered into. There are 
some who might view such actions as a flagrant attempt to intimidate our 
ClearChannel, AOL, Yahoo! and other large webcasters claimed the 2002 rates 
would put them out of business. That internet radio would stop. But that's not 
what happened. Over the past five years we have seen an explosion of 
broadcasters bringing their stations online, expansion by the large webcast services 
and in increase in advertising revenues from 50 Million to 500 Million Dollars. 
We are big fans of internet radio. We love the breadth of the music, the 
niche channels and the spirit created by some of these services. We don't want to 
see them go away but we do want them to pay fairly when they use your 
We feel the CRB decision objectively assures balance between the creators and 
users of music.  The decision affirms the importance of both, as well as 
their interdependence.  It is our hope that we can put this behind us and grow and 
prosper together. 
If you agree with me, I would ask that you take the time to contact your 
Representative in Congress.  More often than not Members of Congress hear from 
constituents when they want something or when something goes wrong.  But it would 
be nice for Members to hear from you that the system they put in place worked 
as Congress intended, and that the CRB did a commendable job in assuring a 
fair, open and comprehensive process.  To contact your member of Congress, click 
ge/home) .  Additionally, voicing your opinion in music trades and on blogs 
would also be quite helpful. 
As always, we remain committed in our goal to better the lives and 
livelihoods of artists and copyright owners.   
Please feel free to contact me or my staff if you have any questions 
regarding these matters. 
John Simson 
Executive Director 

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