WEB RADIO BLUEPRINT — LEGAL OVERVIEW

LEGAL OVERVIEW — (Originally Published 2004,  Revised 2011/2012)
There is no escaping the swirling storm of copyright issues as you launch or navigate your Web Radio station in the current environment.  The issue is so timely that the most recent agreement occurred 6 February 2004 as this thesis was being prepared.  The US Copyright Office approved an earlier agreement submitted to them regarding royalty rates for on-line or Web Radio.  Agents for the webcasters and the Recording Industry, seeking to avoid the costly arbitration process brought upon the emerging Web Radio industry during 2002, reached agreement in early April of 2003 and submitted a proposal to the Copyright Office.  The ratified proposal sets royalty rates and terms applying to commercial subscription and non-subscription services offered by webcasters and Internet radio stations.  This is the most recent in a long line of copyright agreements that influences Web Radio.
The basis for current legal issues faced by webcasters is the Digital Millennium Copyright Act (DMCA) signed into law by President Clinton on October 28 1998.  Also important are subsequent rulings such as the Librarian of Congress Final Rule relating to the Determination of Reasonable Rates and Terms for the Digital Performance of Sound Recordings and Ephemeral Recordings (the Determination), released in July of 2002.  Following “the Determination” were additional rulings such as the Small Webcasters Settlement Act (SWSA) of 2002, followed by an additional agreement reached in June of 2003 between the recording industry and educational and other non-commercial broadcasters that addressed the needs of non-commercial broadcasters with regards to streaming audio content over the Internet.
The DMCA was not the first law to address digital transmissions, earlier legislation named the DPRA (Digital Performance Rights in Sound Recordings Act of 1995), offered limited public performance rights for sound recordings that included digital transmissions.  The DPRA was enacted to specifically address the concerns raised by copyright owners of musical works and sound recordings. This important legislation made two significant, but distinct, changes affecting the licensing of musical works under U.S. copyright law, one to address the questions raised by Webcasting, and the other to address the questions raised by downloadable music files.[i]  However, the emergence of digital transmissions of sound recordings over the Internet did not fall squarely in any of the three categories addressed in the DPRA.
In June of 1998, the Records Industries Association of America (RIAA) began notifying Web Radio stations that they did in fact require licenses to Webcast their sound recordings over the Internet.  They base this assertion on the language of the DPRA.  Although a complete discussion of the copyright law is beyond the scope of this thesis, a primer on the subject is available through Kohn Music @
http://www.kohnmusic.com/articles/newprimer.html
>> Link to the Primer by Attorney Robert Kohn is no longer active, but a wealth of copyright information is available from the main web site, including information on a full book by Mr. Kohn entitled  “Kohn on Music Licensing” (4th  Edition).<<
http://www.kohnmusic.com/
The primer discusses this in detail, and includes Attorney Robert Kohn’s arguments as to why the DPRA did not preclude the Webcasting of non-interactive, non-subscription digital audio transmissions of sound recordings, such as those produced by Internet radio stations.
>> While I have not to date read the full book by Mr. Kohn, I think it is safe to assume that it will include the information originally presented in the primer and much more.<<
Since the DPRA fell short of addressing all the issues related to digital technology and recorded musical content, the DMCA amended the DPRA to include Webcasts, and further instructed that arbitration panels should be convened to set the royalty rates at fair market value.  The led to the establishment of CARP (Copyright Arbitration Royalty Panel) and a period of chaos within the emerging Webcasting industry.  Uncertainty dominated the Webcasting environment, as  “fair market value,” and its application to the various types of webcasters (commercial- large medium or small, non-commercial, educational etc.) was debated.  A concise statement of the substance of some objections is contained within a document submitted by Live365, after the release of the CARP findings, their Petition to Modify or Set Aside the Determination of the CARP, is available at http://www.kurthanson.com/Live365.htm (Filed March 6, 2002, note that that per the Copyright Office Final Rule, Live365 withdrew its objections early in the process).[ii]
>> The Live365 Document referred to is no longer available through this link.  However the main link remains as a connection to an invaluable resource on Internet Radio, the RAIN (Radio and Internet Newsletter) website operated by Kurt Hanson.  Here is a synopsis of the RAIN organization from the website:
“RAIN: Radio and Internet Newsletter is a leading daily trade publication about the Internet radio industry and the nexus of traditional radio broadcasting and new media.  RAIN was founded in 1999 by AccuRadio CEO Kurt Hanson.” <<
The unfortunate result of this period of chaos was the silencing of many streams as webcasters and terrestrial broadcasters with Webcasts abandoned their Web Radio stations in the face of potential unmanageable cost structures.  Even today, the Webcaster Alliance contends that many of its members are operating in non-compliance with current royalty agreements.  Flash forward to 2004, and we see a more successful effort to reach an agreement palatable to at least the larger commercial Web Radio operators.
The current agreement between the recording industry and online radio broadcasters spells out the royalty rates for webcasters ranging from Internet-only webcasters to subscription services to non-commercial radio broadcast simulcasts for the 2004-2204 period.  Chapter 3 addresses this agreement and some of the financial guidelines developed.
Although this agreement represents a step forward due to the diverse companies supporting it, it may not completely settle the issue for small webcasters.  Before this recent agreement, the Webcaster Alliance filed a lawsuit against the recording industry (RIAA) in an attempt to obtain terms that are more equitable for small commercial broadcasters.  Since the large commercial webcasters developed this agreement through negotiations with the RIAA, it is doubtful that it will appease the small webcaster membership of the Webcaster Alliance.  Thus, we will have to see what occurs because of their lawsuit against the RIAA.
Perhaps the bright side of licensing concerning Web Radio is that it is mainly an issue between webcasters and copyright holders, and stations are not subject to the licensing process required for terrestrial broadcasts.  The limited bandwidth of terrestrial radio forces regulation of the allocation of available frequencies, whereas this type of bandwidth allocation is not a component of Web Radio.
Chapter 3 highlights the development of licensing and royalty agreements as they impact webcasters, and outlines some of the things that can be done to minimize the impact of ongoing legislation and changes.
>> In the 16 March 2007 copy of the RAIN Newsletter, Mr. Hanson published an excellent synopsis of the development of the copyright situation as it existed at that time.  He provides an analysis of the development of copyright law with regards to sound recordings, problems with the DMCA and the impact it had on Internet radio, as least to that point in time.  Additional research will be required on my part to update the changes from 2007 until now, but I would seriously recommend that you review the article from the RAIN newsletter available through this link:
http://www.kurthanson.com/news/copyright-law-and-crb-what-went-wrong  <<