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Webcasters Win In Washington

As the Copyright Arbitration Royalty Panel (CARP) prepares to convene to determine the compulsory licensing fees for online music, federal regulators have handed online-only webcasters a win, allowing several services to stay in negotiations with the record companies, despite lawsuits against them.

At issue is whether webcasters that utilize interactivity features that allow users to customize their listening experience should be eligible for compulsory licensing like traditional radio, or whether they should have to negotiate individual, and potentially more expensive, fees with the record labels.

Companies such as MusicMatch and Launch have in the past allowed consumers to rate or skip individual songs, which the record labels say is illegal under the Digital Millennium Copyright Act of 1998. That legislation requires webcasters that provide such interactive features to seek individual licenses with each record label for the material they broadcast, but the law stops short of defining exactly what constitutes “interactive.” When the webcasters pressed the U.S. Copyright Office to clarify the law, the agency sent the issue to the federal courts, where several suits between the labels and the webcasters are still pending.

The RIAA asked the U.S. Copyright Office to exclude several of these companies from ongoing arbitration over the price of music royalties online, and from the upcoming CARP proceedings. Monday’s ruling allows these companies to be included in the arbitration, even as the legal cases played out in courts.

“This decision certainly isn’t surprising,” said Jon Potter, executive director of the Digital Media Association (DiMA). “The record industry asked the court to declare these companies infringers, and simultaneously sued a bunch of them. The webcasters fought to get a declaratory judgement, which is very much a non-violent legal action, and the record companies responded with aggressive infringement suits. The issue will be resolved. It’s just unfortunate that it will be resolved in court, and it’s even more unfortunate that the record industry is showing a willingness to exploit its over-abundant litigation budget, and set to bludgeon anyone who dares challenge them.”

When the U.S. Copyright Office sets a final rate under the compulsory license, all webcasters included in the proceeding will have to start paying the labels for music, including back dues for the time they have broadcast online without paying any fees.

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