U.S. Rep. Howard Berman: Watchdog on Royalty Rates

U.S. Rep. Howard Berman didn’t need to be asked about an update on the issue of the royalty rate Webcasters and companies hosting Internet radio stations should pay. The Democrat representing the eastern end of the San Fernando Valley had the latest news that a music industry group would cap at $50,000 the amount collected from Internet radio companies streaming music on multiple channels. How much would be charged for playing individual songs still needs to be decided, Berman said. SoundExchange collects royalties from Webcasters and distributes them to artists and record labels. As chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, Berman has been at the forefront of the Internet royalty rate issue and other issues facing the radio industry. Berman was first elected to Congress in 1982 after serving 10 years in the California State Assembly. Q: Describe the role your subcommittee plays in regards to the operations of terrestrial and Internet radio. A: The subcommittee I am chairman of has jurisdiction over intellectual property laws copyrights, patents, trademarks. We are not a subcommittee with jurisdiction over telecommunication, over the FCC. On the issue of performance rights, violating copyright laws, those issues come to the committee I chair. It’s on copyright laws, licenses to utilize copyrighted work and issues like that. Q: Other than the webcasting royalty issue what other issues has the committee been handling related to radio? A: The most important one is the issue of the exemption terrestrial radio has from paying for the performance of a sound recording. It is our desire to revisit that exemption for several reasons. We had a big hearing about it last month. We are working on getting legislation ready to introduce, which the radio guys don’t like. Anybody who is transmitting radio digitally has to pay but over-the-air terrestrial is the one platform that is exempt. They have what I think of as an unfair competitive advantage. Q: The radio station owners don’t like this because it is going to cost them money? A: It is going to cost them a few cents on the dollar. There will be some rate determination. They are selling commercial advertising and are drawing customers and are economically exploiting for their programming the work of someone else. That is what compensation is for. Q: Are you planning on having any more hearings? A: We may have another hearing, yes. We are going to work on the legislation. Now understand, the radio stations do pay a right to the songwriters for the musical composition. What they don’t pay for is the sound recording. Q: Does the copyright Royalty Board get involved with determining what the terrestrial stations will pay? A: Right now they (terrestrial stations) are statutorily exempt from paying for that. We would eliminate the exemption and substitute a mechanism to determine a rate like for the musical composition for the song that is set by a rate court based on a decision from many years ago from the Southern District for New York. Every few years when it expires they decide what the new rate should be. A percentage of revenue is how the rate is determined. The bigger and more successful the station the more money they pay. The smaller the listenership and therefore the smaller the commercial revenue, the less they would pay. Q: Would you look for something similar for the performance rights? A: Yeah. But it would be an add on to the right for the musical composition, it wouldn’t be in place of it. Radio stations aren’t wild about this. Q: Do you listen to the radio much? A: When I am listening to the radio I tend to listen to news radio but also music, too. Usually with music I just put in a CD.