Senate bill would enrich mega-corporations like Clear Channel and AOL as much as $100M at the expense of artists and record labels.
In a blatant attempt to strip artists and record labels
of their hard-won royalties for the use of their sound recordings on Internet
radio, proposed legislation in the U.S. Senate would not only invalidate the
March 2, 2007 ruling of the Copyright Royalty Board (CRB), it would roll back by
70 percent pre-decision rates already paid by webcasters.
An analysis by SoundExchange shows that the proposed
rollback in royalties would save big, highly profitable corporations like Clear
Channel, Yahoo!, AOL and Microsoft $100 million or more in royalty payments
during the rate period 2006-2010, and that's only if there is no growth in
listeners. However, expected growth in listeners during the period will result
in an even greater windfall.
"This legislation is a money grab by big
corporations like Clear Channel and AOL at the expense of artists and
labels," said John Simson, Executive Director of SoundExchange. "I
don't see any other way to characterize this as anything other than naked
corporate greed. It's just not fair to artists."
Under the proposed legislation SoundExchange's analysis
shows that, for 2006, $12 million in royalties would have to be paid back to the
20 largest webcasters. By contrast, under new rates set by the CRB, those same
webcasters would owe only $850,000 in retroactive royalty payments for 2006. The
windfall to big webcasters is even more dramatic in 2007 when, assuming no
growth in listeners, the 20 largest webcasters would owe $24 million in royalty
payments, but under the proposed legislation, would only owe $5 million to the
people who create the music upon which they build their businesses.
The legislation is being driven by the SaveNetRadio
coalition. Though the coalition purports to represent some artists and some
small webcasters, it is in fact funded by the big webcasting industry.
Supporters of SaveNetRadio have been mislead into thinking that advancing this
legislation would somehow help small webcasters and artists, when, in fact it
would give more money and power to the big webcasting industry. "The fact
that they would advance the profit- grinding agenda of big webcasters without
regard to the artists they are hurting speaks to SaveNetRadio's true mission and
evident hypocrisy," said Rebecca Greenberg, National Director of the
Recording Artists' Coalition. "If SaveNetRadio really cared about artists,
they wouldn't be fronting for the big webcasters like this."
Simson noted, "There are better, targeted ways to
help the small webcasting businesses without resorting to selling out to the
likes of Clear Channel." In fact, SoundExchange has told Congress that it
is actively engaged in seeking business solutions that could accommodate the
needs of small webcasters while protecting the hard-won, fair royalties that
This bill, introduced in the House by Reps. Jay Inslee
(D-WA) and Donald Manzullo (R-IL), and now in the Senate by Sens. Ron Wyden
(D-OR) and Sam Brownback (R-KS), would arbitrarily reverse the painstaking work
of the CRB, the three-judge panel created by Congress at the request of the
webcasters three years ago. The CRB panel listened exhaustively for 18 months to
all interested parties, heard from dozens of witnesses in weeks of live
hearings, read countless depositions and examined tens of thousands of pages of
evidence focused on, among other things, the services' ability to pay and the
value of music in the marketplace. In contrast, the proposed bill presents no
factual or economic basis for rejecting the reasoned decision of the CRB. This
legislation, if passed, would come at the expense of hard-working artists, who,
on average, received just $360 each in royalties from webcasting in 2006.
"Asking Congress to override a valid, objective
process that Congress created while arbitrarily dismissing the painstaking work
of these expert judges who clearly determined a fair rate for artists and labels
that these webcasters can clearly afford makes no sense," added Simson.