Site Presented By
Sunday, Jul 12, 2009
Apr 1, 2002 | Read the story.
We are writing to clarify several issues raised by your article "Web Radio's Last Stand," which discusses the recent arbitration decision setting royalty fees to be paid by webcasters for using sound recordings. As you might imagine, this is a complex issue, one that resulted in more than two months of hearings in which more than 50 witnesses testified. And it is also an extremely important issue to record labels and artists. Simply put, we want Internet radio to succeed. Given that labels and artists receive royalties from webcasters -- as opposed to traditional radio -- we obviously want webcasters to flourish. The opposite conclusion just doesn't make sense. In fact, these royalties will be an important stream of income for many small labels and artists. And, contrary to the statement in the article, artists get 50 percent of the royalties by law.
During the last three years after the DMCA took effect, we sought to engage webcasters and encourage them to sit down with us to resolve these issues. Many did -- we signed more than 25 deals with individual webcasters. But many more did not. Instead, they chose to sit back and use recordings without paying a dime. Believe it or not, the law gives them the right to do this. Webcasters don't have to pay until an industry-wide rate is set. As it turns out, that rate won't be set until almost four years have passed since the time the law was enacted.
Other webcasters met us with a much more aggressive tactic. They, their lawyers, and their trade association, DiMA, exhorted webcasters not to do deals with us. Instead, they signed up expensive lawyers and economists who they said were skilled in getting low rates in an arbitration, promising webcasters everywhere that the arbitration would be to their benefit. The result was a multimillion dollar arbitration exercise that webcasters are now complaining about -- even though the final rate was almost twice as close to their proposal than to the proposal of the labels and the artists.
A couple of other things. The compulsory license for webcasting was not just about protecting labels and artists from digital copying. It was much more about ensuring fair compensation to the creators of the recordings upon which webcasters have built their business. Doesn't it seem fair that a company using someone else's property should pay for that use? Most webcasters pay huge sums of money -- many times their revenues -- for bandwidth, marketing, hardware, software and other things necessary for their business. If they can pay for all these things, they surely can pay for the single most important asset they have -- the recordings that labels and artists created at great risk and expense.
Again, labels and artists want to work with webcasters. They want webcasters to succeed. And they deserve to be compensated fairly for the use of their recordings. Evidence from both the marketplace and the arbitration demonstrates that all those things can occur.
-- Steve Marks, senior vice president for business and legal affairs, the Recording Industry Association of America (RIAA)
