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Congress Passes SWSA 183

Posted by michael
from the blood-from-turnips dept.
signer writes "Congress has passed the Small Webcaster Settlement Act (House of Representatives link). Webcasters have until December 15th to negotiate Percentage-of-Revenue royalty payments, and they have the option of changing their status to non-profit and gaining a delay until June 30, 2003 to pay owed royalties from previous years. RAIN (www.kurthanson.com) has details."
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Congress Passes SWSA

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  • Text (Score:3, Informative)

    by Anonymous Coward on Friday November 15, 2002 @03:17PM (#4679615)
    Here is the text in case RAIN can't shine:

    In a stunning victory for webcasting, both the Senate and the House of Representatives unanimously passed aImage: Bill text revised version of H.R. 5469 late last night that clears the way for copyright owners to offer webcasters a percentage-of-revenues royalty rate, essentially allowing the parties to mutually agree to override the CARP decision of last spring.

    The Senate passed the bill at 10:32PM ET and the House passed it at 2:44AM. It now goes to President Bush for his signature.

    The bill was actively supported by virtually all players on both sides of the debate this year, including the Photo: Sen. Jesse Helmsrecord industry, artist representatives, large webcasters, small webcasters, college radio representatives, and religious broadcasters.

    In what was viewed as a surprise by some observers, the legislative staff in the office of retiring Sen. Jesse Helms (R-NC) (pictured) apparently played an active and valuable role in crafting what the parties concluded was a much better piece of legislation than the one Helms blocked at the last moment late last month (here).

    Rates and terms removed from legislation
    The key difference between the bill that the House passed in October and the revised bill, renamed the "Small Webcaster Settlement Act of 2002," is that Congress did not establish any definition of "small webcaster" or set any royalty rates in the final version of the legislation.

    Rather, the bill grants both sides the right to enter into a voluntary agreement "without fear of liability for deviating from the fees andLink: SoundExchange terms of the July 8 order" (i.e., the Librarian of Congress's modified CARP decision).

    Specifically, the bill does so by permitting the receiving agent of royalty payments (i.e., SoundExchange) to negotiate on behalf of all copyright owners, whether they are members of SoundExchange or not, for the period beginning October 28, 1998 (i.e., the passage of the DMCA) and ending December 31, 2004.

    Under the new mechanism established by this act, the voluntary agreement envisioned would be submitted to the Copyright Office, published in the Federal Register, and subsequently made available to all qualifying webcasters.

    However, the bill grants the receiving agent that authority to make a settlement with the small commercial webcasters only until December 15th -- so the clock is ticking for both sides to "paper the deal." (CONTINUED)
    RAIN Vendor Guide Ver.3.0 Special issue coming soon: Most indicators seem to be pointing (finally!) toward a more-successful 2003 for both broadcasters and webcasters. To help you in your planning process for next year, RAIN's upcoming "Planning for 2003" issue will showcase products and services that will help you reduce your expenses and increase your revenues in 2003!
    Link: ABC Radio Networks
    Link to Backbone
    Link to: Bean Bag Entertainment Link to BRS Media Inc. Link: Compuone.net Link: DiMA
    Link to DotFM Link: Hiwire Link to IM Networks Link: Interep Link to Interep Interactive
    Link: International Webcasting Association Link to Measurecast Link to The Media Audit Link to Radio Web Stuff Link to Sabo Media
    Link: Stream Madness Link to Surfer Network
    For YOUR firm to be included, call RAIN at 1-312-527-3869 or e-mail kurt@kurthanson.com

    (CONTINUED FROM ABOVE)
    Royalty payments from noncomms
    suspended until next June
    The version of the bill passed last night also suspends ALL royalty payments due from noncommercial webcasters until June 30, 2003, giving both sides time to work out a new voluntary royalty structure.

    Furthermore, the bill adds a new definition of "noncommercial" that permits webcasters who are currently for-profit entities to file for nonprofit status and take advantage of this option as long as they have a "commercially reasonable expectation that such exemption shall be granted."

    This provision seems to permit any "hobbyist" webcaster to make a choice of whether they would like to be a for-profit business or a nonprofit. The bill gives the parties involved until May 31, 2003 to negotiate their voluntary license.

    Stronger non-precedential language added
    The bill contains new and very strong language intended to prevent the deal negotiated in Sensenbrenner's office from being used as precedent in future CARPs.

    One example: "It is the intent of Congress that any royalty rates, rate structure, definitions, terms, conditions, or notice and recordkeeping requirements, included in such agreements shall be considered as a compromise motivated by the unique business, economic and political circumstances of small Photo: Capitol buildingwebcasters, copyright owners, and performers rather than as matters that would have been negotiated in the marketplace between a willing buyer and a willing seller."

    Another example: "Nothing in the Small Webcaster Settlement Act of 2002...shall be taken into account by the United States Court of Appeals for the District of Columbia Circuit in its review of the determination by the Librarian of Congress of July 18, 2002, of rates and terms for the digital performance of sound recordings and ephemeral recordings."

    Such language apparently satisfied the concerns of terrestrial broadcasters (e.g., the NAB and the National Religious Broadcasters) about the early version of the bill.

    ...
    RAIN Analysis

    ...
    Victory!
    An amazing combination of influences has come together to craft a solution that should Photo: Kurt Hansonallow webcasting to move forward to a healthier 2003 and beyond, with benefits for copyright holders, webcasters, and consumers alike.

    This is NOT a victory of webcasters over record labels (or, for that matter, vice versa). It is a victory for common sense, as all parties involved will benefit from a healthy webcasting space.

    The record industry has apparently come to realize that webcasting should not be lumped in with CD burning and file sharing as one of their enemies, but rather that the new medium has the potential to offer real benefits for them if everyone quits acting as if they're adversaries.

    And everyone else seemed to work together as well: Broadcasters did not flex their political might in Washington to try to quash this bill (and thus kill a potential new set of competitors), and Internet-only webcasters didn't use the negotiations to try to get themselves a leg up over broadcasters.

    And record labels and recording artists -- the two factions that share in royalty payments -- used the bill to clarify the functioning of SoundExchange in a manner that had benefits for both sides.

    Congress paid attention!
    Finally, it's amazing to me that such a bill was able to get the attention of Congress -- and unanimous passage! -- during a lame duck session designed to focus on critical "homeland security" issues.

    I'd like to think that last May's "Day of Silence" and the resulting press coverage (and support from listeners) played at least some small role in making this an issue that Senators and Congressmen were willing to pay attention to.

    Now we can move forward
    And now, let's see if copyright holders and webcasters can't execute those envisioned voluntary licenses and then start working together to, among other things, help break new artists, promote genres of music that have not gotten their fair share of terrestrial radio airplay in the past, and help sell records! - KH
    ...

    Look for more details on this bill and industry reaction later today in RAIN.
  • comments from somafm (Score:5, Informative)

    by pengwen2002 (469310) on Friday November 15, 2002 @03:21PM (#4679639)
    The folks at somafm [somafm.com] have some interresting links and comments too.
  • by hazzzard (530181) on Friday November 15, 2002 @03:26PM (#4679686)

    Well, I don't really care where the music comes from.
    Even if you don't understand the foreign languages,
    there are tons of webradios elsewhere
    that will not suffer from these problems
    (i.e. don't have to do massive advertisements to afford casting good music). Does anybody have some links to good webradios in Italy, spain, mexico etc.?? Please post!
  • by pla (258480) on Friday November 15, 2002 @03:31PM (#4679735) Journal
    Umm... Have you looked at the business model of a conventional broadcast radio station, lately?

    They do *exactly* what you say seems so "wrong" for webcasters.

    And, to add insult to injury, the RIAA actually *PAYS* "normal" radio stations to play that copyrighted music.
  • by rhwalker22 (581141) on Friday November 15, 2002 @03:32PM (#4679747) Homepage
    washingtonpost.com's story [washingtonpost.com] quotes several small webcasters praising the compromise bill. According to the article, the bill "does not establish specific royalty rates for webcasters. Instead, it authorizes the music industry's principal royalty collector, SoundExchange, to negotiate binding royalty contracts with small webcasters on behalf of all artists and record labels." Strange footnote: Sen. Jesse Helms had a big stake in the bill as he successfully protected small religious webcasters from the royalty axe.
  • by Darth Yoshi (91228) on Friday November 15, 2002 @03:33PM (#4679750)
    ComFM [comfm.com]

  • by Camulus (578128) on Friday November 15, 2002 @03:39PM (#4679798) Journal
    SomaFM [somafm.com] has a pretty good over view of what it means to them. The answer is we will see (since the negotiations haven't started yet). I really hope they make it back on the air. I want my SomaFM.
  • by Liquor (189040) on Friday November 15, 2002 @03:45PM (#4679849) Homepage
    There is an annual minimum royalty of $500, which means that the smallest of small webcasters may not be able to afford it.
    Umm... I think it's even worse than that.

    I'm no expert at translating from legalese, but it sure seems that $500 is for past revenues, in 1998 - and there's a $2000 per year minimum after that, i.e. $6K for 1999, 2000, and 2001, and then another $2K minimum for 2002. And that's just to settle PAST broadcasts. So there's a minimum outlay of about $8500 for ANY webcaster that's been around for those years.

    Even if a webcaster is non-profit, with no income, they want 5% of expenses - still subject to the minimums.

    Oh, and you're a small webcaster until you make more than a $1.25 Million?
  • Clear-channel (Score:5, Informative)

    by Triv (181010) on Friday November 15, 2002 @04:09PM (#4680036) Journal
    This is slightly OT, but I realised something disturbing a few hours ago and it does relate to the radio/webcasting debate in a roundabout way.

    I've got a friend coming into New York tonight, so I figured I'd check out a few local venues to see who's playing, what's going on and all that. One of my favorite music venues is Irving Plaza [irvingplaza.com]. (flash site) I like going to random shows, I like supporting local music and I like circumventing the RIAA as much as is possible.

    Chck out the link above - see what's in the lower left-hand corner of the homepage under the Irving Plaza logo? "Clear Channel Entertainment [slashdot.org]."

    Fuck.

    I. Can't. Get. Away. :(

    Triv
  • by LostCluster (625375) on Friday November 15, 2002 @04:10PM (#4680049)
    That's simple, that situation will never exist.

    When artists sign an RIAA contract, their label owns every recording they make until X number of albums are released. Which means, if the label drags its feet and refuses to release the last album of the contract, that artist's career is over. They can't take their work elsewhere unless they're a multi-millionaire who can afford enough lawyers to find a way out.

    Therefore, an artist under an RIAA contract cannot directly give you rights. They can't even record a handful of songs on their own and keep the rights for themselves, the RIAA owns everything.

    It's time the music artists unionized...
  • by Frobnicator (565869) on Friday November 15, 2002 @04:29PM (#4680210) Journal
    If you only have 20 listerners, you don't have revenue.

    The law clearly states:

    the royalty rate shall be 8 percent of the webcaster's gross revenues during such period, or 5 percent of the webcaster's expenses during such period, whichever is greater, except that an eligible small webcaster that is a natural person shall exclude from expenses those expenses not incurred in connection with the operation of a service that makes eligible nonsubscription transmissions, and an eligible small webcaster that is a natural person shall exclude from gross revenues his or her income during such period

    It says GROSS REVENUES, not anything about broadcasts or listeners.

    This means that if you only have 20 listeners, you probably aren't making any revenue. If you are a small-time band broadcasting for yourself, you can make it so you make no revenue on the broadcasts. (make revenue on sales of the songs, not the broadcastings).

    The second part says if you don't spend any money other than your regular web hookups (like your DSL, cable, T1, etc.) then you don't have to pay based on expenses.

    The final part is just a protection that personal income isn't part of the broadcasting.

    That's why (almost) everyone likes it. RIAA doesn't mind because they can get you for copyright if you broadcast their songs. Small webcasters don't mind IF they make no revenue. The only people who need to worry are:

    1. The people who make revenue from ads. So the obvious solution there is: NO MORE ADS, (use a donation drive or something) meaning no more revenue, meaning no more fees.
    2. The people who have large expenses for broadcasts, like college and university radio. But they probably aren't paying much for equipment, so 5 percent isn't really too big of a charge.

    Some people's children...

  • by Frobnicator (565869) on Friday November 15, 2002 @04:34PM (#4680305) Journal
    what happens to classical stations now?
    I assume you are talking about the time, and not the style? Nothing changes for those people.

    The music itself is in the public domain.

    The PERFORMANCES are owned by someone. If you have 1845 recording from the London Symphony Orchestra, that's in the public domain. If you have a 2001 perfomance of the same work by the same Orchestra, then you need to work out the rights.

    frob.

  • Re:I'm Done (Score:2, Informative)

    by nightfallsonhoboken (549361) on Friday November 15, 2002 @04:51PM (#4680728) Homepage
    No, it's really not that sad that you won't be purchasing the next Perl Jam album.

    However, for anyone experiencing such anti-RIAA sentiment, I would point out that some of the finest and most groundbreaking music today is released by labels who are not part of the RIAA. (99.9% of artists ARE involved with ASCAP and BMI, but as I understand it, these organizations are separate from and not quite as evil as the RIAA.)

    For example, some of my favorite sources of music are Darla Records [darla.com], Drag City Records [dragcity.com], Teen Beat Records [teenbeatrecords.com], Matador Records [matadorrecs.com], Merge Records [mergerecords.com], Misra Records [misrarecords.com], etc., etc. Many of these record labels are actually NICE to their artists and fair to the consumer (the average cd price is maybe $11-14). Also, online stores like Other Music [othermusic.com] and Insound [insound.com] do a fairly good job of filtering new non-big-five-media-company music. This is, of course, a small slice of the available pie, focused around my particular listening habits. I know that it is daunting at first to try and find music outside the mainstream that suits you, but you really only need to find a few artists or labels to truly open the flood gates.

    My point being, there IS music being made for you that does not diectly suport "the man." Find a record label you like and begin to branch out!

"Morality is one thing. Ratings are everything." - A Network 23 executive on "Max Headroom"

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