Radio Stations Must Pay for Webcasts, Copyright Office Rules By Barry Willis December 24, 2000 — American radio stations which stream music programming over the Internet may be facing substantial outlays in royalty fees paid to record companies, under a December 8 ruling by the US Copyright Office, a division of the Library of Congress. After months of legal wrangling, the office decided that radio stations are just as liable for such fees as other music sites. "Transmissions of a broadcast signal over a digital communications network such as the Internet are not exempt from copyright liability," the ruling states.

Disagreement over royalties has pitted the National Association of Broadcasters against the Recording Industry Association of America and the "Big Five" labels of the music industry, who stand to rake in millions if the ruling is allowed to stand. "We are gratified that the US Copyright Office agreed with our position," said RIAA president Hilary Rosen.

The NAB has promised to continue the fight in federal court. Approximately 4000 of the 13,000 radio stations in the US currently put their programming on the Internet, where it can be heard by listeners far beyond any station's local transmission area. Broadcasters had argued that their FCC licenses for "nonsubscriber" transmissions covered their webcasts as well. "Broadcasters currently pay hundreds of millions of dollars annually to the licensing societies representing the authors, composers and publishers, and have never been required to pay additional fees to the record companies and authors," said NAB chief Edward Fritts.

Unlike European radio stations, which pay royalties to music publishers, American stations have historically been exempt from such fees, although they do pay organizations like ASCAP and BMI to compensate songwriters for material used in broadcasts. Representatives from the NAB and big broadcasters like Clear Channel Communications argued that their exemption from royalties for over-the-air transmissions extended to the Internet as well. The Copyright Office found otherwise, citing federal law enacted in 1996 that requires all webcasters to pay record companies.

Several months ago, a consortium of recording industry organizations created the "SoundExchange" service, intended to compensate labels and artists for Internet performances of their songs, as well as for recordings used by cable- and satellite-based broadcasters. SoundExchange members include the RIAA, the Association for Independent Music, the American Federation of Musicians, the American Federation of Television and Radio Artists, and representatives from each of the "Big Five."

In an interesting twist, Universal Music Group—one of the major labels to benefit from the Copyright Office ruling—was itself sued in early December by a group of music publishers and songwriters, who claimed that their music had been put on the Internet without permission. Plaintiffs in the suit filed in US District Court in New York include the Rodgers and Hammerstein Organization; Jerry Leiber and Mike Stoller; Elvis Presley Music; and Irving Berlin Music Co. At issue was the use of copyrighted properties put on the Universal website Farmclub.com. In its defense, Universal claimed that it "has followed the applicable licensing procedures" for online activities—essentially the same defense put forth by radio stations in their royalty fight.