Joe Kennedy, chief executive of Pandora, told weekly technology law
podcast OUT-LAW Radio that the Copyright
Royalty Board does not understand the medium he claims they are
about to destroy.
"These are three older gentlemen with legal and economic
backgrounds and quite honestly I don't think they even understand
what internet radio is," said Kennedy. "It was quite evident
throughout the proceedings that in all likelihood these three
individuals had never even accessed internet radio in their lives
before."
The fees that internet radio stations must pay in the US to play
recorded music have been changed, and earlier this week the judges
of the Copyright Royalty Board, which reports to the US Library of
Congress, threw out an appeal against the changes.
From 15th May the structure of payments will change and stations
will pay far more for licences. Internet stations argue that for
smaller stations the charges are more than they earn in advertising
in total, and that because they are backdated to cover 2006 many
will go instantly bankrupt.
"The judges adopted the proposal to triple the rates for large
webcasters, and for small webcasters it's actually closer to a
12-times increase in the rates that they pay," said Kennedy. "It's
an extraordinary increase in the rates that will effectively kill
internet radio as we know it today."
Kennedy said that the changes will wipe out the net radio
industry. "Small webcasters are now going to be hit with
back[dated] bills that are literally greater than their revenue,"
he said. "The vast majority of internet radio sites will be
bankrupt.
"Over 90% of internet radio will simply be gone. The net result
will be a huge loss of diversity, a huge loss for music artists and
a loss of virtually all of the internet radio that exists," said
Kennedy.
A similar process is ongoing in the UK, where a dispute over
rates is about to be settled. A number of multimedia and mobile
network companies have objected to changes to the UK internet music
licensing regime proposed by the body in charge of the licensing of
recordings, the Mechanical Copyright Protection Society and
Performing Rights Society (MCPS-PRS) Alliance.
The changes are not as radical, said Ralph Spencer, a technology
law specialist with Pinsent Masons, the law firm behind
OUT-LAW.COM. But the decision in the US, which favoured the major
record labels over the emerging industry, could affect the UK
decision, which is expected in the coming weeks.
"I don't believe it should [affect the UK decision]," said
Spencer. "It was a different set of arguments, and a different
commercial and licensing landscape, but equally there are
similarities so they may well look to this."
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