NAB Challenges Webcast Royalties

Washington, D.C. (March 19, 2008)--The battle over webcast royalty rates rages on. The National Association of Broadcasters has filed a brief with the D.C. Circuit Court challenging the Copyright Royalty Board decision that drastically increased the amount of money paid by local radio stations and webcasters for streaming music.
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Washington, D.C. (March 19, 2008)--The battle over webcast royalty rates rages on. The National Association of Broadcasters has filed a brief with the D.C. Circuit Court challenging the Copyright Royalty Board decision that drastically increased the amount of money paid by local radio stations and webcasters for streaming music.

The NAB argues that the CRB failed to follow the statutory standards for rate setting and ultimately adopted a rate structure founded upon flawed methodology. The brief contends that the CRB's threshold ruling that terrestrial radio stations that stream on the internet ("simulcasters") must pay a per-performance, per-listener royalty, instead of an annual flat fee royalty, was unlawful.

According to the requirements of the Copyright Act, rates and terms should have been determined based on what a willing buyer and willing seller would have negotiated in the marketplace. The NAB states that the CRB did not address simulcasters' arguments on the subject, which, states the NAB, "is a fundamental violation of basic principles of administrative law."

The NAB believes the CRB's determination of the royalty rates was unlawful for four principal reasons:

First, the board's decision to use royalty agreements between record companies and interactive webcaster services as benchmarks was arbitrary and violated the "willing buyer/willing seller" standard. Interactive services are not remotely "comparable" to the non-interactive services at issue here, states the NAB brief.

Second, the Board's brief discussion of why simulcasters should not pay a lower per-performance rate than internet-only webcasters was arbitrary and failed to consider the record evidence.

Third, the mathematical model on which the CRB relied in its attempt to adjust for indisputably significant distinctions between interactive and non-interactive services produces absurd results, and the board's one-sentence rejection of Simulcasters' criticisms was patently arbitrary.

Fourth, the Board did not consider the record evidence in refusing to permit simulcasters to use the alternative "aggregate tuning hours" method for calculating royalties.

The 49-page brief was jointly filed with appellants Bonneville International Corporation and the National Religious Broadcasters Music License Committee.

National Association of Broadcasters
www.nab.org

Copyright Royalty Board
www.loc.gov/crb/