Background
The decision of the Copyright Royalty Board was made following the guidelines of a "willing buyer / willing seller" business model, and as the result of a two-year proceeding, with dozens of witnesses and hundreds of documents from over twenty different parties, including (but not limited to) large webcasters, small webcasters, NPR, college stations, and SoundExchange. The CRB was privy to private financial records and business models of the webcasters, and after reviewing the evidence and testimony, issued their decision (currently under appeal) on May 1, 2007. It is dissatisfaction with the CRB decision that prompted the creation and sponsoring of the IREA.
Statutory license regulations dictate that digital transmissions of public performances of sound recordings need permissions from two sets of copyright owners—the owners of the musical work (usually the songwriter or the composer) and the owners of the sound recordings themselves (usually a record label, unless the artists own their own master recordings). Traditional radio stations pay a flat per-song fee, and are only responsible for paying the musical work royalty. Internet radio is an entirely different market, and is responsible for both royalties, according to the Digital Millennium Copyright Act of 1998.
The sound recording royalty, when paid under the provisions of the statutory license, is distributed to the featured artist on the recording, two musicians' unions, and the owner of the copyright—usually a record label.
While traditional radio stations cannot determine how many people are listening to their station at a given moment, this information is readily available to an Internet radio station. The Internet Radio Equality Act specifies that the provider may choose to pay royalties of:
- 0.33 cents ($0.0033) per hour of sound recordings transmitted to a single listener, or
- 7.5 percent of the revenues received by the provider during that year that are directly related to the provider's digital transmissions of sound recordings.
Read more about this topic: Internet Radio Equality Act
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