It's still the content

The product in an AM/FM terrestrial broadcast is the same as in an Internet webcast. The delivery vehicle should be of no concern.

We live in changing times, and it is essential that we absorb change in ways that make sense for everybody. Sometimes seeing what is relevant about new ways of doing things is not as apparent to some parts of the population as others. Lawyers, of course, are well versed in quoting precedent in order to prove their cases: Logic might sometimes better serve them.

If you have been reading this column for some time you will know that the NAB is not my favorite organization. It is impossible for a single lobbying group to represent the entire broadcast industry, with broadcasters' diverse needs. The NAB does, however, still champion causes that are entirely relevant to the whole industry. One, which has started as a radio issue, also could become extremely important in television.

The battle began when the United States Copyright Office issued a Final Rule that AM and FM broadcasters who simultaneously stream their content on the Internet should be paying royalties to the recording companies. This is a major blow for the radio industry, which has always been exempt from copyright liability for over-the-air transmission of audio recordings. The industry pays royalties to various performing rights organizations, never to the studios. The balance has been maintained over the years, even though royalties from the studio are slightly lower than they otherwise would be, because the authors, composers and performing artists also receive per-play fees. If the system changed and the broadcasters had to get a license — presumably per title or per studio — then the artists would lose out twice, being paid the lower royalties.

The notion of per title, per studio or compulsory licenses is a nightmare in how it would all be organized, especially when the copyright laws have all been drafted to exclude such licenses. Congress has passed laws protecting the record labels by making the piracy of their materials illegal, but not until 1995 was there any public performing rights protection. The Digital Performance Right in Sound Recordings Act (DPRA) offers some measure of protection for digital recordings in interactive transmissions and for subscription audio transmissions. I haven't seen a broadcaster offering streaming audio asking for fees — have you?

The record companies already earn sizeable revenues from the over-the-air play of their material; it is a promotional system that they truly would not want to have to pay for if it was defined as advertisement. Hit songs are made or broken by over-the-air plays.

Rulemaking by the registrars of such as the Copyright Office does not, of course, happen on a whim. The request for such a ruling came from the Recording Industry Association of America, the Association for Independent Music, the American Federation of Musicians, and the American Federation of Television and Radio Artists. The NPRM and the subsequent Final Rule make it clear that these rather heavyweight players persuaded the registrar that streaming over the Internet is not a “broadcast transmission.” Taken in the context of technology today does that make any sense?

A Federal judge in the U.S. District Court for eastern Pennsylvania obviously either thought the registrar was right, or did not feel the need to interfere in the Copyright Office's work, and dismissed the NAB case challenging the Final Rule. The reasoning offered was that the Digital Millennium Copyright Act of 1998 (DMCA) protected the copyright of creative works used in webcasting. Even such a short time ago, however, little was understood about how radio would evolve with the Web, and the Act was cobbled together with some considerable ignorance about what the Internet really is.

It is obvious to the engineering mind that the product being offered in an AM/FM terrestrial broadcast and in an Internet webcast is the same. The delivery vehicle should be of no concern. We don't discriminate between broadcasts over-the-air, through cable or from a satellite in the TV side of the business, but this ruling could clearly open those channels for separate copyright issues as well. It also will considerably hamper streaming of video on the Web.

So, I agree (surprisingly) with the NAB on this issue. If you expected a little Internet radio appliance in your kitchen or car just hold off a while. Maybe the NAB will appeal; maybe the FCC and the Copyright Office can come to federal blows with one another; but to me this is just another instance of Hollywood and its partners going to cloud-cuckoo land with a control-freak issue. As a whole the industry does not trust its consumers, but it feeds a lot of lawyers.

Paul McGoldrick is an industry consultant based on the West Coast.