Pandora Blocks International Internet Radio Streams - Highlighting Royalty Confusion
In an action announced on the blog of popular Internet radio service Pandora, the service has decided to block Internet radio streams that are requested by users with IP addresses that are not in the United States or Canada. This action highlights that fact that it is not only the Copyright Royalty Board decision on US royalties that is causing uncertainty for many Internet radio stations. Royalty obligations for overseas listening also adds to the uncertainty and potential liabilities of these services. Several US Internet radio stations have in the past received royalty notices from overseas collection agencies, asking for royalties for the use of sound recordings that are streamed to users in their countries. This had caused other US streaming companies to block access to their services to foreign listeners. As the royalties that are paid to SoundExchange only cover US listening, until there is a reciprocal agreement between these collection agencies allowing one country's agency to collect for worldwide usage and then distribute the money to the appropriate rights holders worldwide, potential liabilities to multiple worldwide collection agencies will persist.
At last week's Future of Music Policy Day in Washington, DC, SoundExchange President John Simson said that SoundExchange was hosting a meeting in Washington for representatives from a number of international collection agencies in efforts to work out an agreement that would provide a reciprocal collection and distribution agreement for Internet radio services. In this instance, Internet radio operators should be on the same side as SoundExchange, rooting for its sucess in this negotiation to provide one-stop shopping for royalties for all of their listeners.
This also should remind Internet radio services that, when paying SoundExchange on a per performance basis, they are paying for performances to US residents only. Any amounts that a service might have thought about paying to SoundExchange for performances to foreign listeners should be paid to the royalty organizations in the countries where those listeners reside. One more concern for Internet radio companies to keep in mind in staying legal.
If you are a non-comm, educational entity like a museum who streams live with no on-demand service, do you need to get statutory licensing in all listener countries?
I became aware of this bit of convoluted legal buffoonery in April of last year from a news quip announcing that UK broadcasters would be required to limit their streams to domestics only. I pay SoundExchange, BMI, ASCAP, SESAC and I've read through the IFPI and PPL sites. This entire "foreign royalty" deal makes about as much sense as a football bat. It would be great if you could clear up a few facts that I'm obviously missing or confusing David.
I'm all for paying copyright owners and artists their due, but as a webcaster; how many times must we compensate them? Are all these collection societies in place for the benefit of foreign (non-US) artists or just to merely tax listeners while lining their own pockets with "administrative" expenses and un-disbursable funds? There is only one pie and if this continues to spiral out of control any and all that really matters is going away hungry.
One stop shop? Great! So.....just where is IFPI in all this? Have they not been in place for quite some time as the central coordination manager for just this type of dilemma? Even SoundExchange has a provision for a rights holder to appoint them to collect from foreign countries on their behalf. So what's the problem?
It begins with the notion that royalties for streaming music should be based upon the number of recipients regardless of a station's revenue. When the digital copyright laws were fashioned for internet radio the term "performance" took on a whole new meaning. Instead of the conventional wisdom of promotional compensation, all of a sudden a radio broadcast is deemed a mini-concert to the listener and gave the recording industry the right to set up ramshackled ticket booths. This is worse than finding the correct line at the DMV folks. Is anyone really in charge here?
Now, we have every global entity that lays claim to sovereignty racing to the legal lumber yard to nail up their open for business sign. Where does it end? Why stop at countries? Why not states, provinces, cities, home owners associations? --my own living room for that matter! All I need do is email a cease and desist along with an invoice to a webcaster right?
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The IFPI is and has been concerned about the international scope of Webcasting for some time. That is why they developed the International Webcasting Agreement. SoundExchange was formerly a signatory, but is no longer so.
Also I maintain that a royalty obligation should have very little to do with service revenue. The only reason to institute an exclusive revenue-based royalty rate is on occasions when it is too difficult to determine the exact scale of the public performance taking place (as is the case with terrestrial and satellite radio).
To be fair, Internet radio is not even radio. It is a pull-based streaming audio technology with no correlation to traditional broadcasting mediums. Therefore, alternative legal standards could (and perhaps should) rightfully apply.