Keeping the streams alive

Some say Library of Congress decision won't stop the music; Cuban says the fee is flawed
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The Librarian of Congress's decision two weeks ago not to change the rates broadcasters pay for streaming was branded a death blow to the infant industry.

Not quite. Though many streamers see themselves on life support, a few radio companies say they were prepared for the decision and plan to keep streaming, including radio monolith Clear Channel, which says its streaming stations are making money.

On June 20, Librarian of Congress James Billington released his ruling on the rates radio broadcasters must pay record companies to stream radio programming. Commercial broadcasters must pay 0.07 cents per listener per song and noncommercial broadcasters 0.02 cents, though public radio stations affiliated with Corporation for Public Broadcasting have a separate, private deal with the Recording Industry Association of America (RIAA), which represents the record companies.

Both commercial and nonaffiliated noncommercial broadcasters say the RIAA fees the Library of Congress would impose, on recommendation of a Copyright Arbitration Royalty Panel (CARP), are far too high. They point out the fees are more than 100 times higher than those collected by the American Society of Composers, Authors and Publishers (ASCAP), BMI and SESAC for composers of copyrighted material.

According to the Librarian of Congress's ruling, CARP used an agreement between Yahoo Broadcast.com and the RIAA to determine the rates, believing it to be an example of a marketplace-derived contract.

But that agreement was discredited by Broadcast.com founder Mark Cuban, who wrote to Internet publication Radio and Internet Newsletter
that he planned to multicast to 250 listeners per stream, so what looked like a per-listener-per-stream fee was really only a per-stream fee from his end.

"Right there, that's the missing piece of the puzzle for me," said Deborah Proctor, GM of non-profit, classical radio station WCPE(FM) Raleigh, N.C. "I wondered how these rates could be so unrealistically high. That letter really was an epiphany."

But Yahoo's deal with the RIAA expired at the end of 2001, and, last week, Yahoo shut two of its streaming operations—FinanceVision and an Internet-only radio station—rendering its 1999 $5 billion stock purchase of Broadcast.com almost worthless. Yahoo will continue streaming financial clips from outside news agencies and songs and videos on some Internet channels. Yahoo acquired that content in a $12 million purchase of Launch.com last year.

Radio streaming was dealt its first big blow last year when the American Federation of Television and Radio Artists (AFTRA) decided to charge additional fees for use of member artists in TV and radio commercials also played over the Internet. The new AFTRA fees caused many companies to suspend their streaming operations. Some have never resumed; others began stripping the radio commercials and inserting Internet-only commercials.

That was the case with Clear Channel, which is still streaming 210 of its radio stations in top-50 markets over the air. "We're selling advertising into the stream itself to replace the terrestrial advertisements," says Brian Parsons, director of technology for Clear Channel Radio Interactive in Covington, Ky. "We had to turn our streams off until we could replace those spots."

Now, Parsons says, Clear Channel is making money on Internet streaming, something few other radio Webcasters claim.

But Clear Channel, like all streaming broadcasters, says it's still waiting for the Librarian of Congress to release the record-keeping requirements. The original decision by the U.S. Copyright Office would have required broadcasters to keep and submit detailed records of every song they played. The requirements were so detailed, some broadcasters say, that they do not even have access to some of the information the RIAA wanted.

In June, Billington relented and set less stringent interim rules. Broadcasters still are waiting for the final ones, which also could discourage streaming, Parsons says.

WCPE's Proctor vows, "We're going to stream and if we have to get court injunctions to keep from paying these unfair fees, we are going to do it."

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