Big broadcasters don't want their streams taxed off the Net either, it turns out. Here's a progress report on this and other developments in the fight to save Internet broadcasting in the U.S.
The National
Association of Broadcasters (NAB), holding its annual radio meeting in Seattle, has filed a motion with the
U.S. Copyright Office asking for a limited stay on webcasting
royalties for licensed broadcasting facilities, pending an appeal.
(The document is available in .pdf form from the NAB site: see
"NAB's Filing for a Stay on Streaming Fees" under "Latest News")
Joining in the motion are Bonneville, Clear Channel, Cox, Emmis,
Entercom, Salem, and Susquehanna -- all major commercial broadcast
groups.
Those royalties are blamed for current die-off of Internet broadcasting, whose population can
roughly be divided between the terminal and the departed. Both
populations include licensed over-the-air stations as well as
independent Internet-only broadcasters. This latest motion is by
the former, who claim they should be exempt from the fees.
Some background.
The royalties were originally developed through a Copyright Arbitration Royalty Panel (CARP) process
that was required by the Digital Millennium Copyright Act (DMCA) The CARP was
intended to create some kind of agreement between webcasters and
the recording industry. The Panel was convened in 1998 and
delivered its recommendations early this year. It described a
regulatory regime so costly in royalties that it amounted to an eviction
notice to everybody in the business, including licensed
over-the-air stations.
Registrar of Copyrights Marybeth Peters gave hope for relief to webcasters in May, when she
issued an order rejecting the CARP's royalty recommendations. A
final determination of rates by the Librarian
of Congress in June, however, overturned that order. The new
royalty regime became law in July. It called for the first payments
to be due in September, with fees retroactive to October 20,
1998.
The motion was delivered to Marybeth Peters on Wednesday, 9/11.
It claims that broadcast stations should be exempt from royalty
fees while an appeal is pending in the Third Circuit Court of
Appeals. That appeal, the motion says,
"...will determine whether or not an FCC-licensed broadcaster's
simultaneous, non-subscription, digital transmission over the
Internet of its AM/FM broadcast signal ("AM/FM Streaming") is
exempt under Section 114(d)(1)(A) of the Copyright Act from the
limited digital sound recording performance right provided by
Section 1066(6) thereof... Thus, the issue at stake is not how
much, or the terms under which, radio stations should be paying
royalties for engaging in AM/FM Streaming. Rather, the issue is
whether or not stations engaging in AM/FM Streaming are subject to
the digital sound recording performance right at all."
The key word here is "performance" -- the term used by the DMCA
to describe the nature of an Internet stream. A stream is
not, according to this new copyright law, a broadcast in the
customary sense. Guided by this definition, the CARP decided that
the supply side of streamed performances owed royalties for the
privilege of streaming them, much as any performance venue owes
money to the artists who perform there for paying customers. It's a
ludicrous concept with no basis in known business reality
(listeners don't pay to hear commercial radio, for example), but it
served as the basis for taxing away a whole business category --
one pioneered by resourceful operators who make extensive use of
Linux and other forms of free and open source software. (Hence our
interest in the matter.)
So what will this bit of legal wrangling do for innovative
pioneers like KPIG? And where does the Internet Radio Fairness Act -- the Boucher Bill --
play in this drama?
Our primary source for answers to these kinds of questions is
Bill Goldsmith, KPIG's hacker-in-chief, and proprietor of Radio Paradise,
his own landmark Internet-only station. KPIG and Radio Paradise run
their operations and their streams on Linux and other free and open
source software. Bill is also working with Jeff Gerhardt of The
Linux Show to make those hacks more widely available. (Stay tuned:
we'll have news on that one shortly.) Here's what Bill says about
these latest developments:
If the NAB motion is granted, it will help bolster the growing
perception of the CARP decision as a flawed one - but I don't see
it doing much good beyond that. All that the NAB motion asks for is
a "stay of execution" on the fees. KPIG, and other broadcasters who
have pulled their streams, will still have uncertainty regarding
the fees hanging over their heads. Resolution of the issue will
simply be postponed - again.
In any event, it's not like the RIAA or SoundExchange was
going to start sending out bills in October, anyway. They are far,
far, away from being in a position to accurately determine who owes
what, due to the incredibly complex reporting procedure that they
themselves insisted upon. What will be happening in October,
barring some sort of intervention, is that SoundExchange will then
be faced with the task of extracting huge volumes of log data from
all of the stations, which will have to be thoroughly processed
before any billing can take place.
So there's no pressing need for relief from immediate billing. I
understand how the NAB motion could lay the groundwork for future
court challenges, and it will have a definite impact on perception
of the CARP ruling on Capitol Hill & in the press. But it
probably won't have much impact on the decision by KPIG's owners to
pull the streams until they know exactly what they'll need to pay
& figure out where the money is going to come from.
Plus, most everyone I talk to expects that the motion will fail,
anyway.
As for the Boucher bill, it would not only put a freeze on the
implementation of the CARP decision, for *all* webcasters (the NAB
motion of course only affects terrestrial broadcasters) - but it
would send a very strong message to the Copyright Office that the
public interest requires a very different decision than was
rendered last time.
Dean Landsman, a veteran radio station owner and programming
consultant, weighed in with this:
Let's go back to the DMCA, which started this mess. Effectively
the DMCA legislated usage of bandwidth as though it were [radio]
wave spectrum, overlooking an inconvenient fact: terrestrial
broadcasting is location-specific, while broadcasting on the Net is
not. Over the air, a signal carries just so far, no matter how big
it is. Over the Net, every signal has worldwide coverage. There are
no 50,000-watt giants. A station's "power" is a matter of
capacities: number of streams, bits per stream and similar
variables. The threshold of huge is very low. Anybody can play.
It's the Way of the Web. But that's not the Way these guys
know.
Case in point. The original WOLF was a landmark Top 40 station in Syracuse
that in its best years put out a 250-watt signal at 1490 on the AM
dial. You could barely get it in the next county. Today the
Internet station WOLF-FM plays Top 40 hits for anybody in the world
with a streaming audio client, and has thousands of listeners every
day. But our regulatory system here in the U.S. (and elsewhere as
well) is built only to contemplate stations like the old WOLF, not
WOLF-FM.
There are ways of fighting the old system, but you have to be
extremely creative. Ted Turner, for example, solved the signal
range problem by putting his little UHF station -- Channel 17 in
Atlanta -- on a satellite that distributed its video to every cable
system in the Country. The old Channel 17 eventually became the TBS
network. CNN and other innovations followed. Everybody said stuff
Ted was doing couldn't be done. But Ted did it anyway. Smart
entrepreneurs trump regulators every day. Ask Donald Trump.
Today's netcasters are following in Ted's footsteps. The
difference is that Ted took advantage of loopholes *inside* a
system that he understood better than any regulator, or any
competitor -- while his netcasting followers today are going
*outside* that system.
The Net transcends any regulatory regime. Yes, lawmakers and
regulators are doing their best to make life miserable for
netcasters, but it's not like there are no alternatives. Netcasters
don't have to put up with it. They can just move their transmitters
offshore, like pirate radio broadcasters did in the U.K. when the
government still didn't allow commercial broadcasting.
An offshore streaming server is no less accessible to those
using the Web than a domestic one. It's just less vulnerable to
domestic regulation. Unfortunately for domestic licensed netcasters
represented by the NAB and its motion to stay royalty fees, going
offshore isn't much of an option. They're still nailed to the
ground here in the U.S. If they'd had any brains they would have
fought the DMCA, and taken sides against the RIAA in the CARP
proceedings. You'd think with their passion for deregulation they
would have been on top of that one, but they weren't. But these
aren't really entrepreneurs. They're exploiters of a different
sort. Case in point: the much-loved WOLF is now an outlet for Radio
Disney. Local origination is approximately zero.
Meanwhile, the RIAA, the MPAA and their legislative tools remain
blind the obvious: A server in Niue, Tuvalu, The Falklands, Fiji,
Costa Rica -- or any of a zillion other places outside the U.S. --
can broadcast music, or whatever they like, without paying a dime
to anybody.
The Internet's broadcast commons remains a vast and profoundly
level playing field, regardless of hard they governments and
powerful industries try to fence it off in the U.S. (or China, or
any other Net-hostile government). U.S. legislators and regulators
haven't learned how to play in this new commons -- which is by
protecting it, not by protecting its clueless enemies.
Smart netcasters are light years ahead of their nemeses. There
may be a die-off today, but you can bet your next paycheck that
lots of netcasters are already setting up operations offshore. And
they're doing it cheap, so you can bet Linux is involved. In time
they'll demonstrate what Rush Limbaugh and other
free-enterprise-loving republicans have been saying for years: big
government and big regulation is not only bad for business, but
drives the best businesses offshore. I'm only surprised that Rush
keeps missing this sitting-duck opportunity to bash Hollywood for
its hyperprotectionist regulate-at-all-costs mentality.
True, netcasting isn't much of a business yet, but in time it
will be. Serious netcasters are going to want to make money, and
they'll be very inventive and resourceful about it. They'll also be
much more friendly to the sources of their goods than the RIAA or
the Big Five record companies ever were. The opportunities for
market symbiosis are too huge to ignore, especially given the old
industry's legendary shaft-the-artist legacy.
All victories won by the RIAA and the MPAA on behalf of the
artists they claim to represent will be hollow. That goes for the
DMCA, the CARP royalties, and even for this motion by the NAB, if
it succeeds. The victories won by independent netcasters on behalf
of those same artists will be meaningful and lucrative for many in
the long term. Those victories won't happen tomorrow, but they
*will* happen.
Which brings to mind the Gandhi quote so often applied to
Linux:
"First they ignore you.
Then they laugh at you.
Then they fight you.
Then you win."
But we're clearly still at the fighting stage. Knowing the
ultimate outcome doesn't reduce the need to fight.
For more information on the progress of the motion, plus other
issues surrounding Internet broadcasting, visit RAIN, Kurt Hanson's
Radio and Internet Newsletter.
And if you have any information about webcasters going offshore
(especially if the stories involve Linux), please write and tell us about it.
Doc Searls is Senior Editor of Linux Journal.
