NAB Sues U.S. Copyright Office over Webcasting Ruling

The National Association of Broadcasters (NAB) and several other broadcast entities are trying legal means to overturn an earlier ruling by the U.S. Copyright Office that subjected terrestrial broadcasters to digital performance rights when retransmitting their signal via the Internet.

Currently Federal Communications Commission (FCC) licensed broadcasters are exempt from paying performance royalties for terrestrial broadcasts, while the Digital Millennium Copyright Act (DMCA) requires webcasters to pay a compulsory fee which includes the performance royalty.

On December 11, the U.S. Copyright Office ruled in favor of the Recording Industry Association of America's (RIAA) petition to ensure that the broadcaster's exemption was not extended to digital transmissions via the Internet. While usually taking an opposing stance to the RIAA, the Digital Media Association (DiMA), which represents new media companies, including webcasters, supported this position and applauded the ruling.

Jonathan Potter, executive director of DiMA, commented on the ruling: "It is critically important ruling for webcasters to put all parties on the same playing field. It would stunt the growth of this industry if broadcasters had a special exemption."

The NAB is fighting for exemption from the compulsory fee for terrestrial stations going online. Cox Radio, Infinity Broadcasting, Bonneville International, Emmis Communications and Entercom joined with the NAB in filling a complaint against Mary Beth Peters as register of copyrights at the U.S. Copyright office on Thursday, January 25. The complaint argues that the December 11 ruling "exceeded defendant's statutory authority, was arbitrary, capricious, and abuse of discretion, and otherwise not in accordance with law, and therefore is invalid."

The NAB dropped a previous lawsuit against the RIAA's at the time of this filing.

"We believe the copyright office's decision that broadcasters shouldcompensate artists and record companies for webcasts of AM/FM programming is correct as a matter of law and policy," said Steve Marks, senior vice president of business and legal affairs of RIAA in a statement. "Weare hopeful and confident that the federal court will affirm the decision of the copyright office, and we look forward to working with broadcasters as they transition into this marketplace," he continued.

According to Jeff Bobeck, a spokesperson for the NAB, the crux of NAB's argument rests on the fact that the radio stations are not altering their signal in the slightest when rebroadcasting over the Internet, and are not pursuing alternative revenue streams. "It is the original signal coming through a different pipe," said Bobeck. He maintains that the broadcasters are being asked to pay additional fees for a service that does not bring additional revenue. The court document asserts that the copyright ruling could "profoundly effect the ability of the radio broadcasting industry to keep abreast of modern technology."

John Jeffery, executive vice president of corporate strategy for Live365, believes that while the ruling may slow down traditional broadcaster's adoption of new technology, nothing would stop the evolution of the industry. "It may slow them down but you can't stop progress — the terrestrial towers will come down when you can reach every home and auto through an Internet connection," said Jeffery. Live365, which is a member of DiMA, offers webcasts of 27,000 Internet-only radio stations, as well as offering services to help terrestrial stations move online.

Webcasters welcomed the copyright office's ruling, said Jeffery, in part because it brought the NAB to their side of the table. The copyright office begins arbitration to determine the rate of webcaster's compulsory fee in February. These proceedings will determine the back-rate fee for webcasting services dating back to October 28, 1998, through December 31, 2000 as well as setting the rate from January 1, 2001, through December 31, 2002. If the NAB fails in its legal battle, then it will undoubtedly play a role in determining the rate.