Internet radio dealt severe blow as Copyright Board rejects appeal

A panel of judges at the Copyright Royalty Board has denied a request from the NPR and a number of other webcasters to reconsider a March ruling that would force Internet radio services to pay crippling royalties. The panel's ruling reaffirmed the original CRB decision in every respect, with the exception of how the royalties will be calculated. Instead of charging a royalty for each time a song is heard by a listener online, Internet broadcasters will be able pay royalties based on average listening hours through the end of 2008.

The ruling is a huge blow to online broadcasters, and the new royalty structure could knock a large number of them off the 'Net entirely. Under the previous setup, radio stations would have to pay an annual fee plus 12 percent of their profits to the music industry's royalty collection organization, SoundExchange. It was a good setup for the webcasters, most of whom are either nonprofits or very small organizations.

National Public Radio spearheaded the appeal, arguing that the CRB's decision was an "abuse of discretion" and saying that the judges did not consider the ramifications of a new royalty structure. Under the new royalty schedule, NPR will see its costs skyrocket.

The judges were unmoved by the webcasters' arguments. "None of the moving parties have made a sufficient showing of new evidence or clear error or manifest injustice that would warrant rehearing," wrote the CRB in its decision. "To the contrary... most of the parties' arguments in support of a rehearing or reconsideration merely restate arguments that were made or evidence that was presented during the proceeding."

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