Not That It Matters... But Appeals Court Rejects Webcasters' Challenge Over Copyright Royalties

from the and-ignores-constitutionality-issue dept

Last week, we noted that the DC Appeals court had rejected a challenge to the Copyright Royalty Board's rates set for satellite radio. Michael Scott notes that the same court has also rejected the challenge to webcasting rates. Of course, this is mostly a moot discussion, because just days before the decision, SoundExchange and some big webcasters worked out a deal -- though there are serious questions about how reasonable these rates really are to webcasters. Still, this latest ruling once again highlights just how out of touch the Copyright Royalty Board is with reality. If the current negotiated rates threaten to put a lot of webcasters out of business, and the CRB's original rates were even higher, doesn't that suggest a pretty serious problem both with the CRB and with the appeals process? Separately, it looks like the court had no problem at all ignoring the constitutional questions about the Copyright Royalty Board for a second time. It's as if no one wants to actually follow what the Constitution says...

Filed Under: appointments clause, constitution, copyright, copyright royalty board, webcasting

Appeals Court Punts On The Constitutionality Of Copyright Royalty Board

from the another-issue-for-another-time dept

While much of the focus on royalty rates has focused on the settlement between webcasters and SoundExchange, in a separate issue, an appeals court has sided with the Copyright Royalty Board in the rates it set for satellite radio (SoundExchange wanted the rates to be even higher, of course). The court found no reason to rule against the CRB, finding no evidence that the rates were "arbitrary, capricious, or unsupported by substantial evidence." But, perhaps drawing more focus was that, in this case, there were some side questions about the very legitimacy of the Copyright Royalty Board itself. This is due to a recognition (first in the patent space) that some of these appointments appear to violate the appointments clause of the Constitution.

While I do have serious questions about the legitimacy of the CRB, it's got a lot less to do with the appointments clause, and a lot more to do with the question of why judges are setting universal royalty rates in an industry, rather than letting the market set the rate -- especially when the CRB judges often do not appear to be particularly internet literate. So the whole appointments issue seems like a side show. Even if a court were to find that the CRB violates the appointments clause, I'm sure a hasty solution would be worked out, whereby those allowed to make appointments (the president or heads of cabinet-level departments) would simply rubber stamp the appointments.

Either way... it doesn't seem to matter just yet. In ruling on the latest case, basically the issue was punted, saying that the matter wasn't raised in a timely manner, and therefore the question will be ignored for now.

Filed Under: appointments clause, constitution, copyright, copyright royalty board

Traditional Radio Stations Agree To Webcasting Rates; Internet Only Webcasters... Not So Much

from the battle-still-brewing dept

While the big radio stations, represented by the NAB seem to have worked out a deadline deal on webcasting rates, it appears that internet-only webcasters have had their talks break down. This is bad news, of course. The whole situation is something of a farce. Rather than letting the market work the issue out directly, the Copyright Royalty Board (basically some internet-illiterate judges) basically gave the recording industry everything it wanted when it declared what the rates should be -- and made them quite high. Many online radio stations noted that the rates were so high that they would shut down. And, of course, the whole process would make RIAA-spinoff SoundExchange tons of money in administrative fees while separately benefiting the major labels that make up the RIAA by driving the smaller indie webcasters (who play less RIAA music) out of business. A win-win! And, of course, protesting by playing non-RIAA music wouldn't help. SoundExchange gets to collect for that music as well.

About the only reasonable thing was (despite the CRB's refusal to stay the ruling) that SoundExchange agreed to hold off new royalties while the parties negotiated. Time to work out a deal was supposed to end last fall, and despite SoundExchange and many webcasters asking for more time, the NAB lobbied hard to deny that extra time. Luckily they got it anyway, but even the extended period of time has ended. NAB and its big radio stations are fine with their deal, but internet-only webcasters still don't see anything reasonable. On top of that, SoundExchange made a separate offer to "small" webcasters, but most have found that to be way too onerous as well -- especially the part where if they ever get acquired by a larger player, they'll have to go back later and pay the higher rates even for the time when they were small and independent.

And, no one has yet explained why webcasters should need to pay so much money for helping to promote new acts in the first place. Radio, streaming online or over the air, is a great way for people to learn about new acts, giving them reasons to go out and buy products and merchandise or see those acts live. By forcing the very people who want to promote the music to pay ridiculous fees, all the industry is doing is shooting itself in the foot. Again.

Filed Under: copyright royalty board, radio, royalties, webcasting
Companies: nab, soundexchange

Copyright Royalty Board Continues To Make Life Difficult For Webcasting

from the why-bother? dept

I have significant problems with any sort of compulsory licensing scheme, which basically gives the power to a tiny group of people to establish the business models and cost structures for an entire industry. It's as if people who support compulsory licensing don't believe the free market works at all. The latest example of this is that the Copyright Royalty Board, which controls pretty much everything having to do with copyright compulsory licenses (despite often showing little to no understanding of technology) is now saying that anyone who broadcasts music online should have to submit full playlist data on every song they play to SoundExchange, the RIAA-spinoff in charge of "distributing" (if you call what it does distributing) money to copyright holders. While some entities already do this, it does seem like quite a burden for others, but that's what you get when you let a small group of people decide all the rules.

Filed Under: compulsory licensing, copyright, copyright royalty board

Is The Copyright Royalty Board Unconstitutional?

from the this-sounds-familiar... dept

Last month, we wrote about a Constitutional challenge to the patent appeals board. It was based on the theory that the Constitution clearly says that certain appointments can only be made by the President, the courts or the heads of a department. A legal change a few years back let the USPTO director appoint judges to the patent appeals board -- but the Patent Office director is not the head of a department. He reports to the Commerce Secretary who should be nominating the judges -- thus suggesting that all of the appointments over the last few years have been unconstitutional.

Of course, it didn't take long for folks to recognize that the same question may apply well beyond the patent appeals board. In fact, there's a court case challenging whether the current Copyright Royalty Board is constitutional as well. While the article doesn't go into details, it sounds like it's an identical issue. The CRB members are appointed by the Librarian of Congress rather than the President or the head of a department. This particular lawsuit has been filed by an organization that was hoping to compete with SoundExchange for collecting and distributing royalties. The CRB rejected the request. Given how many problems SoundExchange has had in carrying out its charter, it would seem like competition is a pretty good idea. However, rather than fighting that decision specifically, the company recognizes this same constitutional question. Funny how the boards involved in both copyrights and patents may be unconstitutional for the same basic reason.

Filed Under: appointments, constitution, copyright royalty board, copyrights
Companies: soundexchange