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Internet radio chief lashes out at judges

The chief executive of one of the internet's biggest radio stations has said that the judges who raised station copyright fees are ruling on something they know nothing about because they have never even listened to net radio.19 Apr 2007

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."