Webcasters Appeal Royalty Decree

The US Copyright Office is being pulled in opposite directions over a recent decree establishing royalty rates for music played by webcasters. On one side are radio stations and Internet-only music sites, which claim that the rates are too high. On the other side is the Recording Industry Association of America (RIAA), which claims that the rates are too low. Both sides have filed separate appeals in US federal court.

The rate was set June 19 by Librarian of Congress James H. Billington at 0.07¢ per listener per song, or 70¢ for every song broadcast to an audience of 1000 listeners. The RIAA had campaigned for a much higher rate, but even the present rate has already forced some marginal webcasters off the virtual airwaves.

RIAA chairman Hilary Rosen said the royalty decision was reached "based on a misguided reading of the record" with "improper weight given to the testimony of Yahoo!" Rosen claims that the result seriously undervalues music used on the Internet. Digital Media Association executive director Jonathan Potter contends that the RIAA has no interest in setting rates "that will enable thousands of small webcasters to survive, or that will enable music lovers to continue enjoying the diverse Internet radio experience that promotes myriad artists whose music is never performed on traditional radio." Congressman Jay Inslee (D-WA) has introduced legislation that he hopes will resolve the conflict.

In a related development, Sony Corporation has announced a new variety of "digital rights management" (DRM) technology to protect copyrighted content. OpenMG X, as the copy-control scheme is called, allows distributors to control how the content is used. An encoding device at the front end of the distribution chain inserts code that determines how long and how often the content can be used; a server computer distributes the DRM-encoded content to users.

Sony also has an applications module that software developers can use to create OpenMG X-compatible templates. No firm plans for OpenMG X products were announced, but Sony expects the technology to find its way into cellular phones, portable audio players, and gaming consoles. Sony-backed subscription music site pressplay is also reportedly examining the potential of OpenMG X. A version of OpenMG X is already included in Sony's Magiqlip software, a music player for PCs.