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Base the Fees on Revenues

NMC/Radio and Records eChart main column as published in the 5/17/02 issue of R&R As the Librarian of Congress convenes to determine the methodology of the fees to be charged webcasters for streaming copyrighted music, one thing is clear. A per song, per listener fee, based on business models that fell out of fashion long before the dotcom bust, is not going to work.

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Of all the models available, the only one that seems to assure a reasonable return to copyright holders and still allow anyone to play in the space is a combination of revenue-based fees and an alternative minimum amount that makes sure that no one goes without paying something.

ASCAP, BMI and SESAC understand this model very well: it's the one they use for their performance fee structure, and it's been praised in this discussion over the CARP fees. In general, you pay a different rate if your site features advertising, and you pay based on the size of your site. There is also a fairly reasonable minimum of a couple of hundred dollars yearly that should be doable for even a hobbyist site that wants to run nothing but rare b-sides of old jazz artists.

Broadcasters are watching this all closely as well. Stations are in flux over whether simulcasting their signals makes any sense, or will ever make any money. On the if-come, groups like Clear Channel, Susquehanna and others are participating in the conversation, just in case the lay of the land changes and there emerges a clear profit model that appeals to the big and medium sized companies that dominate terrestrial broadcasting. As of now, the math doesn't work for them either, even with the 50% broadcaster discount.

Legislators are listening. Some 20 members of Congress recently got together and wrote a letter to the Librarian saying that the current methodology works against Congress' avowed desire to encourage new technologies. Given the state of the webcasting community today and the tanking of webcasting advertising rates and sales, the fees that might have worked 4 years ago certainly won't today, and in fact, will kill the marketplace that copyright holders hope to profit from, and the Congress would like to make sure that the Librarian is fully aware of the intention of the Digital Millennium Copyright Act.

The Librarian of Congress has to balance three separate constituencies: making sure that copyrights are protected, the public gets access to material, and that webcasters can make a go of this space as a business. Driving companies out of business would be counterproductive. As one e-mail writer said to the roundtable about what copyright holders should consider: some of a little is better than none of a lot. We'll see what happens on Tuesday.

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