A federal court has upheld a December ruling by the U.S. Copyright Office that requires terrestrial broadcasters to pay to stream their signals over the Internet.
The U.S. District Court for the Eastern District of Pennsylvania said “it strains credulity to suggest that Congress intended to exempt AM/FM streaming, which is global in nature, while simultaneously limiting retransmissions to specific FCC-defined geographic areas.” Radio broadcasters are exempt from paying royalties to record labels for terrestrial broadcasts of their music, and had hoped to extend that exemption to cover webcasting.
The ruling was a major defeat for operators of radio stations, many of whom also operate Web sites that carry the content of their broadcasts live. If the court’s ruling stands, they will have to pay licensing fees to songwriters, music publishers and record companies.
The decision means that broadcasters, including companies such as Clear Channel Communications and Viacom’s Infinity Broadcasting will have to pay fees totaling in the millions. Clear Channel and Viacom are currently participating in a Copyright Office rate-setting for webcasting services.
U.S. District Judge Berle Schiller ruled Wednesday that although it might make sense for Congress to treat Internet broadcasts in the same manner as traditional broadcasts, the law does not specifically call for that. He said the ruling of the U.S. Copyright Office is rational and the courts should defer to it.
“While technology has increased exponentially in the last 20 years, Congress has relied on and vested in the Copyright Office certain powers to cope with the ever-evolving technological landscape,” Schiller wrote. “It is this interplay between Congress and the Copyright Office that must set the guidelines. As much as possible, courts should be passive players in this quickly changing area.”
The National Association of Broadcasters said Thursday that the ruling would upset a long-standing, mutually beneficial relationship between broadcasters and record companies.
“Broadcasters currently pay in excess of $300 million annually in music licensing fees to compensate songwriters and music publishers,” said Eddie Fritts, the president and chief executive of the broadcasters’ group. “Any additional fee to compensate record companies would be unfair and unreasonable, and for that reason, we are reviewing our options.”
