Online radio streamers seek emergency stay in court of appeals

A variety of groups, including the Digital Music Association, AccuRadio, and National Public Radio, filed a petition for an emergency stay before the US Court of Appeals in D.C., of the order imposing new performance royalty fees on online streaming music providers. The petitioners interpret SoundExchange’s argument to mean that, if we define a streaming station as a single running program of pre-selected music, then every such program constitutes a station in and of itself, even if that station plays to only one person.

Thus the $500 minimum royalty fee per channel could be construed as a “fee per playlist,” which could entitle SoundExchange to royalties even far beyond what we previously considered to be unprecedented. While SoundExchange was only entitled to a total of $18 million for 2006 under the statutory license, the ‘minimum’ fees for 2006 for just three licensees (RealNetworks, Pandora, and Yahoo) would be over $1.15 billion. They would dwarf the licensees’ radio-related revenue by substantially more than a billion dollars.

NPR’s interest is slightly different. Many NPR stations are streamed online, for which it does owe some royalties under current law, but a rather nominal fee due to exemptions pertaining to its status as a public broadcaster, as well as the fact that NPR stations don’t present playlists of popular music.

Under the new streaming copyright system, however, the fact that an NPR station could play popular music means that it could owe royalties on a pre-emptive basis. Thus, stations that used to pay virtual pocket change in royalties could suddenly find themselves owing millions per year.

A stay could allow Congress to act before the July 15 deadline. Congress is considering the Internet Radio Equality Act.