The Chronicle: Colloquy Live Transcript

Webcasting Fees and College Radio

Thursday, August 15, at 1 p.m. U.S. Eastern time

Are the new Webcasting fees unfair to college radio stations? How should stations respond to the fees?

New fees for Webcasting music have many college radio stations evaluating whether they can afford to continue their Webcasting operations. Music-industry officials say that the fees are appropriate compensation for performers and the companies that sponsor their work. But many college radio stations say that the fees are inappropriate, given the role of Webcasting in building audiences for performers.

» Radio Silence (8/16/2002)

Will Robedee is vice chairman of Collegiate Broadcasters Inc., a trade group for campus radio stations. Mr. Robedee, a critic of the new fee system, is leading a lobbying effort to change it. He is also general manager of Rice University's radio station, KTRU-FM. Mr. Robedee will respond to questions and comments on Thursday, August 15, at 1 p.m., U.S. Eastern time. Advance questions are encouraged and may be posted now.

A transcript of the chat follows.

Dan Carnevale (Moderator):
I'd like to thank Will for agreeing to answer our questions today.

So let's get started.

Will Robedee:
I'd like to thank the Chronicle for this opporutnity to discuss the issues of Webcasting and their relevance to college broadcasting. It is important to note that I am not a lawyer, and the views expressed are my own and not specific legal advice. More information can be found on the SaveOurStreams Website at www.rice.edu/cb/sos.

Question from Larry, U of Michigan:
As an individual, I can mount a web cam in a public area, and anyone on the internet can view what's going on in that location. Couldn't I (as an individual) also mount a mike in a public area where a radio happened to be playing in the background and stream that video/audio to the internet? If so, wouldn't having the "radio portal" private and independent of the station (just picking up audio by evesdropping on the airwaves) prevent the imposition of fees?

Will Robedee:
The station would not be liable, but you would. There are provisions for incidental music, but this would not fit into that category. Examples for incidental music in the the CARP report include brief performances during news, talk, and sports programming. It also makes mention of background music at public events, but does not allow the performance of entire songs or more than 30 seconds of a song when used as theme music.

Question from Michel Pariseau, Dir. Bus Dev, Davis Partnership Architects:
Why hasn't the fee structure used to collect fees for ASCAP been considered? At 1.615% of annual gross income, that seems like a reasonable sum. If a commercial station can get that kind of deal, why shouldn't a college station pay that kind of fee or one comparable to what NPR pays? Is this even on the table? Best Michel Pariseau

Will Robedee:
Good question.

Section 118 of the copyright laws provides a fixed fee for non commercial, non Corporation for Public Broadcasting qualified stations for the musical work (ASCAP, SESAC and BMI). The Copyright Arbitration Royalty Panel rejected examining the fees set in 118 because the parties to the agreement that resulted in 118 insisted that those fees not be used to set other music licensing fees. Even so, I think the CARP should have looked at the *model*, particularly with respect to non-commercial radio. A fixed annual fee is a model that works for the musical works licensing. It should be applied here as well.

Otherwise the costs of the required recordkeeping (details of which are not final) is likely to exceed the cost of the music license for a year, for many stations. The additional burden on the stations resources is also potentially crippling. The 118 model also works for broadcasters, because it is limited in its recordkeeping requirements. The Performing Rights Organizations can sample stations over a one week period once a year. Adopting the same model for Sound Recordings, with like data requirements would be a workable solution.

The CARP also reasoned that a performance-based fee was also more appropriately reflective of what is being licensed.

The NPR portion of your question also raises an interesting point. NPR, CPB, and the RIAA reached a negotiated agreement. The details of that agreement are confidential. In fact, they were apparently not even considered by the Arbitration panel which used other agreements to determine rates. What we do know about the agreement is that CPB pays the fees for stations that are CPB qualified. Stations with less than 10 full-time employees are not required to do recordkeeping.

Most student radio stations do not meet the requirements of being CPB qualified. The requirements are available from CPB and include a full time personnel and operating budget threshold.

Question from Chris Wheatley, Ithaca College:
About retroactive fees: If Sound Exchange sends me an invoice for streaming one of our stations since 1998 and the other since 2001, isn't it up to them to prove that we have streamed X number of songs to Y number of listners? We didn't keep records, although some data is available through logs from our RealPlayer encoder. Still, I won't pay until they can prove it, and I won't be spending any precious time going through four years of data. What's your take on this, Will?

Will Robedee:
Sound Exchange will not send you an invoice. They will send you a form for you to complete, called a statement of account. This form has not been made available because the recordkeeping regulations have not been finalized.

The Copyright Office is aware that many stations have not kept records and seems to be struggling with how to determine rules for distributing the fees collected. It seems likely that some form of a proxy will be used.

They have determined rules for estimating the number of performances. Web-only stations, need to use 15 songs per hour, Licensed stations need to use 12 songs per hour in their estimates. Stations then need to multiply the number of performances by the Aggregate Tuning Hours or ATH.

ATH is calculated, in simple terms, as the number of hours streamed to various users. If you stream to 100 listeners in a hour, your ATH for that hour would be 100. A web station would therefore need to report 1,500 performances for that hour, using the optional estimation formula.

The rub in the formula is that most stations do not currently have a means of calculating ATH. In many instances, the server logs needed to determine ATH may no longer exist all the way back to the October 28, 1998 effective date.

Concerning your statement about not paying, I would suggest you speak with the legal department at your University. Organizations can and do often offer their take on the laws, but ultimately it will be the station and if it is a University station, the University that will have to make a decision on how to proceed and what the pros and cons of their choice will be.

Question from Owen Holmes, Cal State Fullerton:
Do the fees apply to internet-only radio stations? That is, colleges that do not have traditional broadcast stations?

Will Robedee:
Unfortunately not only is the answer yes, but Web-only stations at colleges and universities will also be charged the commercial rate for Webcasting. The non-commercial rate only applies to FCC licensed, non-commercial stations.

Question from C. G. Steinman, Michigan community college:
We've decided to keep operating our station, pay the required royalties, and take an active role in changing the requirements. How can we find out specifically what is owed, learn how to track what will be owed in the future, and obtain reliable advice about what is allowed and what isn't allowed?

Will Robedee:
Specifically what is owed depends on when you began Webcasting and the size of your audience. When the regulations are complete, Sound Exchange will send a form for you to complete to report your performances and calculate your rates. For a sample of what you might expect to pay, you can visit the collegebroadcasters.org Web site. There you will find sample charts of both licensed non-commercial stations and all other non-interactive, non-subscription Webcasting. What will be owed in the future depends on the size of your audience, your license status (whether you're FCC licensed as non-commercial or not), and the number of songs you play that you have not obtained a release for and are copyrighted. Broadcast organizations like Collegiate Broadcasters Inc. (CBI) are good resources to learn information concerning this topic. In the end, however, it is the stations and the university's responsibility to act appropriately, and should clarify their questions with their legal counsel.

Question from Robert W. Tucker, InterEd, Inc.:
This seems like an increasingly lopsided playing field favoring the recording industry. However, given that industry's goal of fully rationalizing the economic value of their products in the market, does it make sense for the distribution channels (e.g., college radio or commercial radio for that matter) to do the same with respect to their economic contributions to that same market? If so, have models been developed?

Will Robedee:
Congress has long recoginized the value of radio airplay with respect to sound recording. That is why broadcast stations are not subjected to these same royalities in their broadcast operations. Many argue that webcasting is no different. The RIAA has obviously disagreed with that position, and have suceeded thus far in creating these new performance fees for webcasting. The arbitration panel that helped to develop the rates and the librarian of Congress both cited a lack of data to determine the promotional value of webcasting, even though stations and listener testimony show that webcasting helps sales and doesn't hurt sales. Forrester Research shows that even downloading may help CD sales, but it's important to distinguish that webcasting is not downloading and the requirements and regulations require webcasters when possible and feasible to not disable copyright-protection mechanisms employed by the recording industry. Further, the regulations require users of streaming software to enable copy-protections features if the software offers such features. So I agree that there is promotional value to webcasting that has not been accounted for in the rates. To my knowledge, there is no solid, active plan to implement what you have suggested.

Question from Krista Mazzeo, Cabrini College:
Why should college stations be responsible for those ridiculous fees at all? Why isn't there a small flat rate, as in regular broadcasting? College stations, as everyone knows, are non-profit, educational stations, which have little to no operating budget. I just don't understand how this has become an issue at all. Do the licensing companies really need the money that badly, or are they trying to prevent Webcasting all together?

Will Robedee:
I agree with the notion that a small fixed fee similar to that used for the compositions of music used for broadcast stations would be appropriate with respect to the sound recording performances. The copyright holders are looking for a new source of revenue. There are many theories out there that agree with your thought about trying to prevent Webcasting altogether. I don't subscribe to the theories, nor do I discount them. Unfortunately, the outcome in many situations for college Webcasting will be the ceasation of operations, regardless of the intent of the copyright holders.

Question from Joseph Venalia, College Market Consultants:
Is there any indication that regulations might be modified so as to permit college stations to accept advertising which could offset these new operating costs?

Will Robedee:
The regulations covering FCC-licensed, non-commercial stations are not likely to change any time soon. And most college broadcasters would agree that it is not in their interests to see those regulations changed. There are college stations that have obtained commercial licenses, which will require them to pay the commercial Webcasting fees, which are higher than the non-commercial fees. There are also college stations that are not FCC-licensed, which are not restricted by federal regulations from seeking advertising. These stations are also subject to the higher commercial fees. To clarify, the fees for non-commercial FCC-licensed stations are .02 cents per song per listener. The commercial rate is .07 cents per song per listener. Thus, it would -- in many instances -- require substantial time, effort, and income to offset the increased fees if their status were to change, which again is not likely to happen.

Dan Carnevale (Moderator):
We're about half way through. Keep those questions coming.

Question from Joel R. Willer, University of Louisiana at Monroe:
In light of the potential crushing impact of the new fees and recordkeeping requirements, why should my station continue its Webcasts? What future developments (and dates) should we keep watch for that might influence or change our decision to continue?

Will Robedee:
The first thing I would suggest is to evaluate your situation and your potential liabilities. If a station stops webcasting now, they are still liable for the retroactive fees. The likelihood that the additional accrued fiscal liability will be significant is low. In the case of stations that will not exceed the minimum fee of $500 per year, there is no additional liability.

Concerning the recordkeeping requirements, the Copyright Office has not announced what will be required in terms of data and the likely format that the data will need to be reported. They have put on their Website what they call "likely interim" recordkeeping requirements. It further states that the interim requirements are likely to be transitional and that more comprehensive data could be required several months down the road when the final requirements have been determined. I would expect to see a further notice from the Copyright Office in the near future to ask for comments the final recordkeeping requirements.

With respect to the list of "likely interim," data I don't expect to see any changes.

The reason the interim recordkeeping requirements has not been finalized is the lack of an agreement on format for reporting the data. This leads right into the next question concerning dates.

The Librarian of Congress has set September 1, 2002 as a likely effective date for the new rules, yet the recordkeeping portion of the rules has not yet been determined. I would expect that the Copyright Office will seek public comment on the format problem in the next couple of days, unless a negotiated settlement is reached.

If there is a request for public comment, the recordkeeping issues may not be settled for another couple of months. It would seem logical that the effective date of September 1 would need to be pushed back due to the delay. If that is the case, then the due date for retroactive fees would also be pushed back. Currently, the due date is October 20, 2002.

Unfortunately, recordkeeping is likely to be more of a problem than the fees for many stations that will pay only the minimum. Depending on the final requirements, stations may find there is no way to provide the data required.

Question from Keith R., KCSB Santa Barbara:
What will be the effect of the small, independent and artist-run labels who are starting to waive the fees? Since we play many more of these sorts of songs, how can we be sure we are charged less of a fee?

Will Robedee:
Small, independent labels and copyright holders, which waive the fee, can effectively reduce the station's overall liability if the station plays those recordings. Under the regulations, stations are only required to report material that is subject to the fees and pay fees only on those recordings.

Question from Dean Browell, Ferrum College:
Are there any exemptions for non-profit institutions? Does it count as "radio" broadcasting if you are playing an MP3 Playlist of an artist who is appearing at your college if they have granted permission?

Will Robedee:
No, there are not any ememptions for non-profit institutions. In most instances, the artist does not own the copyright to the sound recording. If you do get a waiver for the Webcast for the sound recording from the copyright holder, you are not liable to pay a sound recording copyright fee.

Question from Tom Michael, Chicago:
Does placing a song from a CD onto an automated playlist on the radio station computer and then broadcasting that song during after-hours consitute TWO performances or one, because the listener has only heard the ONE.

Will Robedee:
The copy is referred to as an ephemeral copy, and stations will need to add an 8.8 percent ephemeral fee to their sound performance fee. So while it is not a second performance, there is still a copyright fee to be paid. Interestingly, the Copyright Office in a report to Congress recommended that the ephemeral fees in Webcasting be removed. Congress has not acted on that recommendation.

Question from The Chronicle:
If someone recorded one of your station's radio shows, and then Webcast it, would you expect compensation?

Will Robedee:
I hadn't even considered that. It's an interesting question, and the answer depends on the manner in which it is used. If it is used for commercial purposes, I think any non-commercial station would have a problem with that. Even in non-commercial use, the answer would vary depending on the station's and universitiy's philosophy and whether the material is copyrighted.

Question from Chirs Pruszynski, WGSU-FM, SUNY Geneseo, Upstate New York:
The "Radio Silence" article by Dan Carnevale says that CPB has negotiated its own Webcasting rates, but that the CPB rate is "kept confidential." Why? Don't we, as taxpayers have a right to know the details of this agreement? Does the FOIA apply in this case?

Will Robedee:
One of the interesting aspects of the arbitration process is that it was directed to take a look at the marketplace and the agreements negotiated in the marketplace to determine rates. It would appear, upon reading the Arbitration Panel report, that this agreement was not considered in determining the rates. The CPB is not technically a government entity, and the Freedom of Information Act request would not likely yield any results.

Question from Joel R. Willer, University of Louisiana at Monroe:
Are we stuck with the fees established by Copyright Office? Won't the RIAA strike a deal for college stations?

Will Robedee:
There are three possible avenues to take, other than negotiating with each copyright holder.

1. Change the law that created the new fees, recordkeeping requirements and content restrictions. The Internet Radio Fairness Act is a step in the right direction and it, or other legislation that provides relief, should be supported.

2. Court Action. There are a number of filings in court recently on the rates.

3. Negotiation. The RIAA is not likely to negotiate a rate with college stations prior to a negotiated settlement with commercial interests. There is hope for a negotiated settlement, but the issues are many and the time table is short.

Question from Dustin Grau, SPSU, Marietta, GA:
Are the current regulations and rules for the broadcasting fees officially in place? Was it CARP or the Library of Congress that actually agreed upon the final terms of the rates? Why does the Library of Congress even have a say in this matter to begin with?

Will Robedee:
The effective date of the rates and regulations was announced to be September 1, 2002 -- with the fees retroactive to October 28, 1998. The retroactive fees are scheduled to be due on October 20, 2002. Some problems in finalizing certain portions of the regulations may push the effective date back a month or two. The Digital Millenium Copyright Act (DMCA), which created the sound performance royalty fees for Webcasting, provided the opportunity for Webcasters and copyright holders to privately negotiate fees. The RIAA requested the Copyright Office to convene an Arbitration Panel to determine statuatory fees due to the lack of broad licensing agreements. This request is provided for in the DMCA. As required, the Copyright Office convened the Copyright Arbitration Royalty Panel (CARP) to determine rates. The arbitration process concluded on February 20, 2002, with a report generated by the panel and submitted to the Librarian of Congress. The Librarian of Congress had until June 20, 2002, to accept, reject, or modify the CARP report. On June 20, the Librarian issued a final rule and order in this proceeding as required by law.

Question from Jeremy George, Yale U.:
Just to be sure I understand, with the ATH you mentioned earlier of 100 times 15 songs per hour times .02 per listener/song means $30/ hour. Or, for a 24 hour station, $720/ day. Or, for such a station on every day of the year $262,800.

Is my calculator broken?

Will Robedee:
The formula used cited 15 songs per hour in the instance of stations that are not non-commercially licensed by the FCC. In determining royalties for such stations the rate is .07 cents per song per listener. In doing your math, it appears you misplaced a decimal. To help stations estimate their fees, there is a Webcasting FAQ on the CBI Web site at collegebroadcasters.org. In the instance of a station that would play 15 songs per hour, and average 100 concurent listeners, the annual fee would be just over $10,000. For non-commercial stations, the fee would be over $2,200.

Question from Tom Michael:
I am a college radio DJ and firstly, would like to know HOW they will be tracking our playlists. We record on bound paper copies and only list artist, title, and song. Secondly, I'm told they expect us to record an expanded number of criteria (including UPC code, date of release, etc). Is this expected?

Will Robedee:
The record-keeping requirements are potentially the most troubling, because they could force stations that could afford the fees to cease Webcasting because they cannot meet those requirements. The Copyright Office has not announced what will be required in terms of data and the likely format that the data will need to be reported in. They have put on their Web site what they call "likely interim" record-keeping requirements. It further states that these requirements are likely to be transitional,and more comprehensive data could be required several months down the road when the final regulations have been determined. I would expect to see further notice from the Copyright Office in the near future to ask for comments on the final record-keeping requirements. With respect to the list of likely interim data, I would not expect it to change. The reason the interim record-keeping requirements have not been finalized is the lack of an agreement on format for reporting data. Stations around the country are still using pen and paper to record their playlists. Under these rules, stations will have to acquire hardware and software to record the basic data-requirements outlined by the Copyright Office, which at this point do not include UPC code or date of release. The most troubling data element in the list of "likely interim" requirements is that of performance. The Copyright Office has not defined performance in this context. It could mean the number of times a song is played, it could allow you to use ATH (which many stations do not have a means of calculating), or it could require an actual per song/per listener count.

Question from Shaun Rapske, Kettering University:
How will the powers that be go about determining if a station is paying the correct fees if the station does not submit any logs or file any forms? In fact how will they even know a station exists if it runs Webcasting off a university server?

Will Robedee:
In order to comply with the regulations, stations that Webcast must file a notice with the Copyright Office. Stations that do not submit a statement of account can be pursued legally by the copyright owner. Many universities will not allow themselves to be put in a potentially litigious situation by operating as such. Further, if a station is Webcasting, the copyright owners can easily locate the station and check their status with the Copyright Office or Sound Exchange.

Dan Carnevale (Moderator):
That's all the time we have for today. I'm sorry that we weren't able to answer everyone's questions.

Thanks again to Will Robedee, and thanks to everyone who joined in and asked questions.

The Chronicle will continue to cover this issue, so stay tuned for more news.

Thanks!

Will Robedee:
It has been a pleasure to participate in this forum. Once again, I would like to thank The Chronicle of Higher Education for this opportunity. Two resources I would suggest are both online: Save Our Streams Web site at www.rice.edu/cb/sos and the CBI Web site at collegebroadcasters.org. I would be happy to answer additional questions via email links at both of those Web sites. Before I leave, I want to make sure that stations take an in-depth look at their situation and evaluate their status before making the decision to either cease or begin streaming. Again, I would be happy to discuss this in detail via the email links at the Web sites.