The RIAA, the DMCA, and the Forgotten Few Webcasters: A Call for Change in Digital Copyright Royalties

I. INTRODUCTION II. WEBCASTING AND COPYRIGHT LAW: A HISTORY A. How Webcasting Works B. Copyright Background. C. The Musical Work (Composition) Copyright and Mechanical Compulsory Licensing D. Digital Performance Right for Sound Recordings E. Multi-Tiered System 1. Interactive Internet Transmissions 2. Non-interactive Internet Transmissions 3. Non-subscription Broadcast Transmissions II. THE DMCA AND A NEW ERA OF COPYRIGHT LAW A. Digital Millennium Copyright Act B. DMCA Fallout C. CARP Royalty Rates D. Problems with the Willing Buyer/Willing Seller Standard E. CARP Rate Recommendations F. Congressional Legislation IV. THE FORGOTTEN FEW A. Internet Radio Post-SWSA B. The "Changing" of the Guard C. Internet Radio Equality Act D. Negotiations E. Possible Solutions To Keep Internet Radio on the Air 1. Jukebox Approach 2. Elimination of Multiple Intermediaries 3. Satellite Radio Rates 4. Revision of the DMCA V. CONCLUSION I. INTRODUCTION SomaFM began as a pirate radio station which first broadcast at the 1999 Burning Man Festival in the desert of Nevada, (1) and has risen to become one of the largest "small" Internet-only radio stations, with over one million listener hours per month. (2) As stated by the creator of SomaFM, the problem with modern radio broadcasting is that, "[b]ig radio's least-common-denominator approach creates playlists that the least amount of people will ever turn off. There's no personality, no edge.... The challenge here is to do a lot with a little." (3) SomaFM, which grew through word of mouth and mailing lists, is an example of an enterprise springing directly from the independent and pioneering mindset of the Internet. (4) It is also an example of the growing trend of listeners moving away from large, sterile, modern AM/FM stations to the world of niche Internet radio with more specialized audiences: Unfortunately, this area of Internet radio and independent programming may soon die. Radio programming is playing an increasingly important role in the Internet world. By 1999, an estimated thirty-five percent of Americans, approximately twenty-nine million, had tried streaming audio or video via webcasts. (6) Unfortunately, due to an ever-increasing number of actions by the Recording Industry Association of America (RIAA) and the Copyright Royalty Board's (CRB) recent setting of royalty rates for webcasters, the mix-tape genre of independent Internet radio may soon be gone. In March 2007, (7) the CRB issued a decision that substantially increased the fees webcasters had to pay record labels through its royalty collection organization, SoundExchange. (8) The CRB set the minimum annual fees at $500 per channel. (9) Previously, the fee was $500 per service; (10) this was a devastating rate hike. For example, after this fee increase, SomaFM's royalty bill rose from $10,000 to $600,000 for the year of 2006. (11) In effect, this increase would make webcasting so prohibitively expensive that it would put the vast majority of small webcasters out of business. Only intellectual property law has had a more rapid growth than the overall average for federal statutes in the time period between 1946 and 1994. (12) Further, statutory expansion in copyright law has been more rapid than in any other intellectual property field. (13) The problems dealt with in this Note are directly related not only to this rapid expansion, but also to the issues between lobbyists, copyright holders, and small businesses wishing to use intellectual property rights without being priced out of existence through the current economic rent system. A large part of the current predicament is that, "given the very long copyright term and the very low costs of duplication of many types of copyrighted work[s]" there are greater potential rents from copyright than through the other areas of intellectual property law. …