The rate is set by a government-appointed panel under the 1998 Digital Millennium Copyright Act. Online firms have said they want to pay a few percentage points of their gross revenues, while the record companies are believed to want as much as 15 percent of gross revenues. In light of that behavior, it makes sense that Yahoo has left behind the industry collective for purposes of its performance rights license. But dotcom companies, including Yahoo, joined DiMA under the assumption that they could win more victories against the record industry lobby by acting together, rather than alone. And the performance rights battle was by far the biggest unfought regulatory battle between the dotcoms and the record industry.
Arbitration is normally very time intensive.
Indeed, Potter sees arbitration stretching over many months. But he thinks the wait will be worth it in the end, with the panel forcing record companies to settle for a lower royalty payment than they would extend voluntarily, in a deal like Yahoo's. In the meantime, it remains to be seen how many of the association's other members will be willing to wait out the process, now that Yahoo has jumped ship. Ryan Tate covers digital media for UpsideToday. Network and research Internet industry deals and dealmakers.