David Crotts, of Senator Helms’ office, has passed this on to Blogcritics regarding passage of HR 5469:
- Small Webcaster Settlement Act of 2002
November 15, 2002
Last night, the U.S. Senate and the U.S. House of Representatives passed Senator Helms’ substitute amendment to HR5469, the Small Webcaster Settlement Act of 2002.
Senator Helms applauds Chairman Sensenbrenner’s hard work in seeking to address the concerns of small webcasters who were facing economic extinction as a result of the original rates established by the Librarian of Congress.
Though an improvement over the Librarian’s rates, the original House-passed bill sought to put the imprimatur of Congress on a private agreement reached between a small number of commercial webcasters and the Recording Industry Association of America.
After House passage of the original bill, many small webcasters contacted Senator Helms to express reservations about the precedential effect of Congress enacting into positive law the rates, terms, and record-keeping requirements contained therein. Seeking to improve the bill, Senator Helms worked to craft an accord to address these concerns.
Highlights of the bill –
* The Small Webcaster Settlement Act of 2002 enables small Internet radio services and the recording industry to settle their longstanding dispute regarding the amount of royalties that should be paid for the privilege of performing sound recordings over the Internet.
* The Internet Radio CARP demonstrated to industry and Congress just how expensive and time-consuming a process it is. Because of the costs and expenses, the vast majority of small businesses are effectively precluded from participating. The inability of small businesses to participate resulted in the CARP arbitrators set a single royalty rate that is so high that if implemented it would have the effect of bankrupting many small webcasters.
This is not what Congress intended when it authorized the performance royalty and created the CARP process (which is why broader CARP reform is on the agenda of next year’s Congress). (Note – Rates may be set in private agreements or in their absence, the DMCA authorizes arbitrators to set the amount of royalties that Internet radio services should pay recording companies and recording artists. The arbitration process – known as a Copyright Arbitration Royalty Panel (or CARP) – existed before the DMCA.)
* By passing this legislation the recording industry and small webcasters, including non-commercial webcasters, can now agree to more reasonable retroactive royalty rates notwithstanding the CARP’s decision.
* The RIAA and small commercial webcasters had already agreed on a percentage-of-revenue royalty system that differs significantly from the CARP decision, and which will enable small webcasters to stay in business. This legislation authorizes that agreement to be executed in the form of a license between the parties, and thereby ensures that small commercial webcasters have a viable alternative royalty structure. Senator Helms urges the RIAA to offer a similar license to noncommercial webcasters and small broadcaster-webcasters.
* Precedential Impact – Importantly, this legislation explicitly precludes any negative impact on other industries or entities that choose not to settle or that may have litigation pending. This legislation also does not affect the pending appeal of the CARP royalty decision.
* This bill requires that artists be paid their Congressionally-mandated share of these royalties directly, so there is no longer any risk that record companies with unfair bargaining leverage will – by contract – squeeze recording artists out of their fair share of royalties.
Though the latter provision is subject to some interpretation, and there is already concern that “expenses” taken out of the pool could damage the spirit and $$ going “directly” to artists, overall this appears to be a grand victory for webcasters, artists, and fair play. Congratulations all, expecially Sen. Helms. Never thought I’d say that.