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Defining personalized

Court asked to determine whether Webcasters can pay single fee 6/10/2001 08:00:00 PM Eastern

A group of Webcasters has asked a federal court to determine whether their services are indeed "interactive" and thus ineligible for a blanket copyright license.

At issue is which category of Webcasters will be able to pay one copyright fee to offer audio content over the Web and which will have to negotiate individual deals with record companies, a much more complicated feat.

The Digital Media Association (DiMA) and member companies Launch Media, MTVi, MusicMatch and Listen.com sued the Recording Industry Association of America (RIAA) in U.S. District Court in San Francisco on June 1, asking the court to decide whether the types of Webcasting services they offer are "interactive" and "personalized." If the court finds that the services can be defined by either of those terms, the Webcasters will be ineligible for the blanket license.

DiMA maintains, however, that the services are instead "consumer-influenced," meaning that visitors to their sites rate music and other content, which helps the sites tailor content to visitors' preferences.

"These are not on-demand services," says DiMA Executive Director Jonathan Potter. "It's just like when you call a radio deejay and ask him to play your favorite song."

RIAA Senior Executive Vice President Cary Sherman says the law defines an "interactive" service more broadly as one that allows the user to "receive a transmission specially created for the recipient." RIAA argues that, by being able to accept input and thus tailor a streaming-audio service, DiMA's members are interactive.

This issue was partly addressed late last year in a proceeding at the U.S. Copyright Office. The agency decided that traditional Webcasters who stream their radio signal over the Internet are eligible to pay a blanket copyright fee, known as a compulsory copyright license. A compulsory license covers the copyrights of all content providers, so users can pay one fee into an established pool and have their fees distributed.

However, the office's ruling purposely left up for debate the definition of interactive. Bill Roberts, senior attorney at the Copyright Office, said last week that the law is too vague for the agency to create a definitive rule: "This is best resolved by the courts."

DiMA's action at the court is in response to a filing that the RIAA submitted to the Copyright Office last month, seeking to keep DiMA and its member companies out of an upcoming proceeding that ultimately will set the rate for all qualified Webcasters' compulsory licenses. "DiMA does not seek to clarify the law," RIAA wrote. "It seeks to change the law."

But DiMA argues that the law is unclear. "We are throwing ourselves at the court and saying, 'Please resolve the rules. If you resolve the rules, we can build sustainable businesses,' " Potter says. DiMA's members have already volunteered to pay both new and retroactive royalties, once the rates set. The fees likely will bring in millions of dollars for the record companies.

DiMA is not asking for any damages from RIAA, just legal clarification from the court.

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