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Webcasting Made Legal

Webcasting Made Legal

Mar 1, 2002 12:00 PM, By Scott Hanley

In previous editions of BE Radio, we’ve learned a bit about the Digital Performance Right in Sound Recordings Act of 1995 (DPRA) and the Digital Millennium Copyright Act of 1998 (DMCA). They are a mouthful, but thanks to these two new laws plus the results of a failed court challenges in response to these new laws, we now have a roadmap of the rights territory we’ll be in with a digital future for terrestrial broadcasters as we try to be heard on the Web.

The new laws are pretty clear; digital content use is all about content. If you own content, you can use it in existing and new ways. If that content belongs to somebody else, you’ll need to have permission to do so � and pay for the privilege.

IBOC notwithstanding, the view of our digital future at the moment is pretty much focused on the Internet. In short, to be on the Internet you have to pay for:

  • the technical costs, including hardware, software and bandwidth;
  • original compositions and other authorship of creative works; and something new,
  • the use of each specific performance by an artist/performer.

Old rights extended

There are two types of copyright for musical recordings. One is for the composition, the other is for the actual recorded performance. Up until the DMCA, broadcasters were exempt from paying royalties for performance.

In the U.S., radio has long dealt with the copyright issues of composers of music. Radio outlets that carry music have paid blanket fees to licensing agencies like ASCAP and BMI for years. Stations have been allowed to use compositions by paying the negotiated blanket payments, plus the requirement of occasionally reporting playlists of music when requested.

As an aside, recently some news/talk radio and TV outlets have gotten out of the business of paying blanket fees, instead paying fees on a per-program basis, but that’s another story.

The short rule is that if you play a song, you pay the composer. The new laws establish that new media (such as streaming webcasts) is a new use. So, additional compensation is due to the composer for the �extra� use.

As for costs, ASCAP and BMI have stated that their streaming agreements are �experimental� in nature, because they are not sure where the business model will land. For example, in 2001, the BMI Annual Minimum Fees listed on their website ( ranged from $200 to $600.

When the Associated Press chose to exercise its copyright of written content in a �new use� on the Internet in the summer of 2001, it caught many broadcasters unaware, and unhappy. Under the AP’s interpretation of the new laws as upheld by the courts, even reading AP copy on the air � and then on the Internet � is a new use.

New rights

The major change for broadcasters who want to stream their live or nearly live content is the addition of rights for performers. While other countries have long had a performer royalty payment, it’s a new subject for U.S. broadcasters.

The Recording Industry Association of America (RIAA) has taken a lead role in promoting additional fees to performers and producers as well. The initial negotiations with RIAA seemed a bit bumpy, and the fee structure that was first sought seemed outrageously high to many broadcasters. The long-awaited report from the Copyright Arbitration Royalty Panel was issued February 20. The rates are lower than the RIAA’s request, and they give broadcasters an advantage over streaming-only services, but they are based on a price per song, per individual listener – not a blanket fee. This first round of fees is retroactive to usage from 1998 to 2000. Negotiations for other years are underway. The report is subject to final approval by the Copyright Office in May.

The American Federation of Television and Radio Artists (AFTRA) also has a major stake in the new digital performance rights. Under the AFTRA Radio Recorded Commercials Contract, radio performers are entitled to 300 percent of the session rate for commercials recorded for radio if they are also used on the Internet.

This is the major reason that a number of large-market stations that rely heavily on AFTRA talent ceased streaming in 2001 until they could find a simple way to block from being webcast those commercials that were broadcast. A lower-cost agreement negotiated between broadcasters and AFTRA may finally return the spots to the Web, but only time will tell.

Statutory license

A major provision of the DMCA is the allowance of a Statutory License to cover broad groups of parties � in our case, radio stations and the record industry. A Statutory License Fee allows stations to pay one group, such as the RIAA, to handle the royalty payments. Otherwise, stations might have to negotiate with each individual copyright holder � an onerous task. There are hopes that a blanket royalty rate for the entire industry could be negotiated.

The DMCA also allows for other negotiated agreements. RIAA, AFTRA and others have also been working on licensing deals with streaming providers � companies that some radio stations pay to host their streaming. Similar negotiations directly with several major radio groups were blocked by the Copyright Office in December 2001, but still could gain approval.

Stations that are not yet streaming may want to consider paying the $20 fee for a Statutory License with the Copyright Office of the Library of Congress.

The digital future

Seek legal counsel to help you sort out a strategy for an online presence as there is only one given for U.S. radio in the digital world: everybody pays.

Commercial and non-commercial stations may have different measures for how the rights organizations will determine a station’s fair share, but ultimately, anyone who wants to be on the Net will be paying, one way or another.

In the long run, webcasting for broadcasters will end up being a business decision � just like the rest of our efforts. Without a good reason for the investment, there is nothing to sustain. If several thousand dollars a year (or tens of thousands) in technical and rights costs is beyond a station’s reasonable investment, then the plans for worldwide reach must be placed on the back burner.

As a mark to level the terrestrial radio’s competition from other forms of media: if everyone pays, so will satellite and Web-only competitors.

Hanley is director and general manager of WDUQ-FM, Pittsburgh, PA.

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