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Update: sanity may yet prevail

By Scott Bradner

We still do not know if Internet radio will soon die, but the prognosis looks somewhat better than it did not all that long ago.

A few weeks ago I commented on the proposal to require that Internet-based radio stations pay royalties to record companies and performers and on the worry that the fees would silence the Internet airwaves. (cite article) At that time the proposal, developed by the Library of Congress's Copyright office, was under review by the Librarian of Congress with a decision due by May 21st. Now one shoe has dropped. The Librarian of Congress has rejected the proposal and evoked a provision in the Digital Millennium Copyright Act (DMCA) that gives the Librarian another 30 days to come up with a final plan.

The decision to reject the proposal was announced right on time on May 21st with a press release that said, in its entirety "On February 20, 2002, the Copyright Arbitration Royalty Panel (CARP) reported its determination to the Librarian of Congress in the above-captioned proceeding. In accordance with 17 U.S.C. 802(f), the Librarian is given 90 days from date of delivery of a CARP report to review the determination and issue a decision setting forth the final royalty fee and terms of payment. However, if the Librarian rejects the CARP's determination, section 802(f) provides an additional 30 days for the Librarian to render his final determination.

The Register of Copyrights recommends, and the Librarian agrees, that the CARP's determination must be rejected. A final decision will be issued no later than June 20, 2002."

At this point one can only speculate about the mindset of the Librarian of Congress but there is an opportunity for an outcome that will balance the need for the record companies and performers to get paid for their creations and the economic viability of the still young Internet radio concept.

A number of readers sent me email in response to the last column. Most expressed outrage that the intellectual property rights gang would be able to wield so much power. One supported the proposal as fair. Another letter expressed outrage that I would waste so much bandwidth letting KHYI play while I was not there. And one letter, purporting to be from someone with knowledge of what was going on behind the closed doors, said that all was not lost -- implying that there were not only record company sycophants behind the doors.

There is no sure bet on how this will come out. Many people agreed with my assessment that the proposal was almost irrational in that it would kill a baby industry that could develop into something strong enough to actually provide revenue just to pursue a many times failed pipe dream of subscription-based riches, or to just kill Internet radio outright with no other plan. But a number of people associated with the record companies seemed to seriously feel that the fees were too low and that higher fees would be somehow supportable. The Librarian could have decided that the proposal was too lenient and there is gold hidden somewhere in the bits.

But I do have hope for a logical outcome and eagerly await June 20th when we will see the final, at least for now, decision.

disclaimer: Harvard has seen rather many final-for-now decisions in its 363 years but this anticipation is mine.