Monday, July 16th is the first business day after the effective date of the new Internet Radio royalties set by the Copyright Royalty Board. As we wrote earlier this week, the Court of Appeals has denied the requested stay of the effective date. And, while a bill was introduced in Congress this week to provide for a legislative stay, that will not be acted on by Monday, nor will action occur on the broader Internet Radio Equality Act. Thus, many webcasters are asking what they should do on July 16. Some have suggested that they should stop streaming, while others have wondered what will happen if they don’t pay the higher royalties. This decision is one that each webcaster should make carefully, in consultation with their counsel and business advisers. But there are some practical considerations that should be taken into account when making the decision as to what should be done on Monday.
First, it should be noted that not all webcasters are equally affected by the royalty rate increase. Larger commercial webcasters, including most broadcasters who are streaming their signals on the Internet, should have been paying royalties up to now that, while lower than those adopted by the CRB, have increased by "only" about 40% – from $.00076 per performance (per song per listener) to $.0011 per performance. These rates will continue to increase between now and 2010 so that they eventually will reach $.0019 per song per listener. But for now, the increase is relatively modest (as compared with some of the other increases discussed below). While there are reportedly at least some conversations going on between SoundExchange and groups representing broadcasters and large webcasters about reaching some sort of accommodation on royalties, there is no certainty that any deal will be reached, so these webcasters probably should be paying the higher royalties (and hoping for a credit against future royalties should there be an agreement reached in the future to reduce these royalties, a successful appeal, or future legislative action reducing the royalties).