On Thursday, June 20th, the US Copyright Office announced new "performance royalties" for all US webcasters, placing what amounts to a retroactive tax on all webcasters, including WFMU.

American webcasters who wish to provide programming must now pay an unreasonably high tax to the major record labels (as represented by the Record Industry Association of America) for every major label song they play, multiplied by every online listener who hears it.

Broadcast stations have never been asked to pay this performance royalty. (On the contrary, record labels have traditionally lobbied, bribed and paid radio stations to play their records. Believe it or not, many stations will now be charged for webcasting the same songs they are paid to play over the airwaves.)

WFMU (and most broadcast stations) have long paid the reasonable publishing royalties to songwriters and composers through companies like ASCAP and BMI. (Our annual publishing royalty fees are currently around $2000 annually.) These performance royalties are a new concept.

NPR stations (which receive money from the government) will be charged a lower rate than stations like WFMU (which receives no money from the government), and the fees for all NPR stations will be paid by the Corporation of Public Broadcasting.

Since the new rules were announced, many webcasters (large and small) have ceased their operations, and in coming weeks, many more will follow. On June 26th, Yahoo announced that it would stop streaming all local radio stations, including WFMU. (Our two streams from yahoo will quickly be replaced. See the "News" section at wfmu.org for details.)

The record industry's contention that it is only trying to receive fair compensation for their music is hard to believe, given that so many webcasters will simply go out of business. The record industry cannot collect fees from companies who cease to exist. How much will the RIAA collect now from Yahoo?

This is a matter of great importance to WFMU, since our financial health is related to our online broadcasts. Without the charitable contributions from our online listeners, WFMU would probably be facing bankruptcy right now.

Now the good news: since 75% of the music that WFMU plays is not subject to these new record industry fees, WFMU will be able to continue webcasting and archiving. But we will need to institute a few changes which some listeners (as well as some of our own DJs) may not be happy about. First, our streams and archives will no longer be recordable to a computer hard drive. Second, we will require ALL of our DJs to maintain online playlists, in order to demonstrate that three quarters of our programming is not subject to this new fee. Third, we will seek written permissions from independent US record labels who allow us to stream and archive their material. Our own DJs will still have the right to play whatever they want to.

There will be at least one more appeal to congress on this issue. When new appeals are underway, we will notify you of the exact information and the deadlines, and we will encourage you to contact your elected officials. Phone calls and letters to your elected officials are the most effective, but e-mails are better than nothing. There is a sample fax, and info on how to get your contact your federal representatives here, but remember, "cookie cutter" letters and e-mails are less effective than original, heartfelt letters and phone calls.

For now, rest assured that WFMU's webcasts will remain online. Station Manager Ken Freedman, June 26th, 2002

your name
street address
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Representative [name]
US Congress
Washington DC


Dear Representative [name filled in]:

I am writing you to express my strong request that you support H.R. 5285 The INTERNET RADIO FAIRNESS ACT - a legislative act offering relief for small webcasters on the Internet. I listen to Internet radio and I want to see the current variety provided by these small, independent entrepreneurs preserved, something we have lost with commercial terrestial radio since deregulation.

The February 20th Copyright Arbitration Royalty Panel (CARP) ruling on per-song royalty fees for web casting and its June 20th affirmation by the Librarian of Congress will bankrupt the small independent webcasters if allowed to go forward.

The key fact here is that the recent CARP ruling was based on a single marketplace contract between Yahoo! and the Recording Industry Association of America. Recently the lead negotiator on that deal , Mark Cuban of Yahoo's Broadcast.com, published a letter in which he explained that he worked with the RIAA to set rates in that contract so that "lots of webcasters couldn't afford to stay in business on their own." The rate was set high by design in hopes that small webcasters would have to come to Yahoo for their streaming needs, since they couldn't afford the rates if they wanted to operate independently.

The CARP panel and the Librarian of Congress, constrained by the specific wording of the DMCA found that they had no choice but to use this deal as the basis of their rate determination. However, the CARP panel itself noted that the RIAA had engaged in selective negotiation practices to produce only those contracts that represented their own financial goals.

In other words, even though there was clear intent to bankrupt the small webcasters or force them to use Yahoo's Broadcast.com, the CARP panel and the Librarian were forced to affirm a rate based on this collusion by the RIAA to fix prices at an artificial, unaffordable rate. This smells of anti-trust. There is something fishy about CARP!

The only hope for small webcasters is immediate legislative relief in the form of Congressman Jay Inslee's HR 5285 - THE INTERNET RADIO FAIRNESS ACT. I am writing today to request that you support this legislation to protect small webcasters on the Internet.

As a separate matter, in these times of the Enron and Worldcom scandals, you may also wish to investigate the RIAA's predatory pricing behavior and open collusion to fix prices. I believe it represents the exact sort of corporate greed and illegal behavior that has cost the American public billions in recent months.

Sincerely,
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