Yesterday Free Press launched a Rescue Internet Radio Campaign to protest the new royalty rates being imposed on digital audio broadcasters. I think it makes a lot of sense in this case to take some time to understand what's going on here, and in particular why those rates are greater than those rates paid by traditional broadcasters -- those AM/FM guys who broadcast on some part of the wireless spectrum.

So what happened here was that the U.S. Copyright Office's Copyright Royalty Board endorsed a proposal (pdf) put together by the RIAA-associated SoundExchange royalty organization. SoundExchange's license fees are set by law and have in the past been pegged at $.0003 to stream one song to one listener -- what's known as a listener hour. With this decision, CRB set those rates to $0.0008 retroactively for 2006. They climb from there, starting at $.0011 this year and increasing each subsequent year until they plateau at $.0019 in 2010. Under the plan, every digital audio channel would have to make a minimum $500 royalty payment to SoundExchange, including non-commercial stations. In the past, small webcasters were able to pay royalties based on revenue, with a small minimum fee per year -- something around $2000, I think. No more. What happens to them now? One estimate is that while traditional radio stations paid about $1.50 per listener in 2006, digital broadcasters will pay about $9 now and about $15 in 2008. The argument goes that for some digital broadcasters, their royalty obligations would come in at more than they money they take in. Many will quit broadcasting, most likely.

What's important here is that these are royalties for performance. The royalties collected by SoundExchange are based on the actual performance of the song. Half of what SoundExchange collects goes to the song's copyright holder, who is usually the recording company, while 45% goes to the featured artist(s) and 5% to backing musicians and vocalists. There was no performance rights for sound recordings before the 1990's and especially the Digital Millennium Copyright Act. and when the DMCA established one, it applied it only to digital performances. Of late, SoundExchange et al have been pushing for the application of a performance right to terrestrial radio, including Sirius, XM, and the like. As it stands, however, traditional broadcasters are right now exempt from the performance rates that digital stations have to pay. But both digital and traditional broadcasters do have to pay a fee to the composer of the song recorded. Those generally go to one of three composers' organizations -- ASCAP, BMI, or SESAC.

So the way it stands now is this. If you live in New York and hear Melissa Etheridge sing her version of Tom Petty's "Refugee" on say, Z100 at 100.3 FM, then the songwriters (Petty and guitarist Mike Campbell) are the ones to whom royalties are directed -- via ASCAP. But if you hear the same song on Pandora.com, then the work of both Etheridge via SoundExchange and Petty & Campbell are being licensed. (Fun fact: Petty says that the inspiration for "Refugee" and the whole "Damn the Torpedoes" album was his anger with the whole ferkockteh recording industry.)

Crystal clear, no? All this is fun (and profitable) mental exercise for lawyers, sure. If you think all this makes it extremely challenging to take on Internet radio as an entrepreneurial project, you're of course right. How did we get to this point? Consider that in 2004, the RIAA described digital radio as "the perfect storm" -- and they meant that in a bad way. The threat from digital radio is "real and imminent," (pdf) they said, and they argued that the greater potential for copying and the like had to be accounted for. Thus the establishment of SoundExchange. And in theory, the SoundExchange system was a way of making formal the webcaster model and streamlining the process by making clear what the costs of doing business are up front. And it also rewards performing artists. It's a good thing for performers to get paid, no doubt.

One reading of this situation is that the Copyright Royalty Board set rates at something shockingly high as a way of opening the discussion. And in fact, the CRB will hold further hearings on the royalty rate hike. The Free Press Rescue Internet Radio campaign is a way to let the CRB know that any royalty scheme that makes digital radio impossible is bad policy for all of us.

We had such a lively time discussing copyright here a few weeks back that I thought I might briefly touch on it again while there's a juicy case in the news. DJ Drama, the Atlanta-based maestro behind the "Gangsta Grillz" mixtapes noted for launching the careers of Young Jeezy and Lil Wayne, has been thrown in the pokey on a felony RICO charge for selling unauthorized compilations. I'm not going to begin to argue merits of this case -- I don't really know the first thing yet about hip-hop's mixtape culture. But this is part and parcel of our approach to copyright enforcement, where the recording industry conducts operations alongside the police while wearing black raid vests stenciled with "RIAA" on the back. (Just because I've been digging into felon voting rights for a story I'm working on, I'll share a fun fact. If Drama is convicted of mixtape-related offenses, he'll lose his right to vote until he completes prison, parole, and probation. But Georgia beats a state like Florida, where felons lose their voting rights more or less for good.)

It's probably best to warn you now that I have a lot of ideas stored up about the way things oughta be. And that I'll be unloading them on you over the next few weekends until I get them out of my system. Sorry about that. Next up is copyright.

The problem with the current copyright debate is that the argument for tight restrictions on the creative content is so easy to make. It's on the model of "you wouldn't walk into Tower Records and steal a CD, now would you? Hmm?" That's a story that's compelling in its simplicity and moral clarity. And the Motion Picture Association (MPAA) and the Recording Industry Association of America (RIAA) -- with their very big footprint on Capitol Hill -- have the chance to repeat that basic story again and again. Soon, there's not much room in the heads of legislators and staff for other ways of thinking about copyright.

But the challenge of dealing with the licensing of creative content isn't all that black and white, of course. Consider this, if you might. Documentary films are one of my favorite things in the whole world. I'm intrigued by the idea that non-fiction film has a power to show, rather than tell, why progressive ideas are the way to go. What docs are so great at is telling rich, compelling stories. And there's much power in that because, of course, it's through stories that we learn much of what we know about the world. With that in mind, yesterday morning I started pulling together a list of docs that I might be able to propose as a sort of a progressive non-fiction film "watch list" somewhere down the road.

A natural candidate for the list is Eyes on the Prize, a 14-part series on the American civil rights years from 1954 to 1965, from the early resistance to segregation through Martin Luther King's last years.

Well, to be honest, I'm going on faith that Eyes is a natural fit. I've never seen it. That's because when the filmmakers were assembling the doc, they were so struggling to just get by that they forwent the ideal but expensive "worldwide rights in perpetuity" and paid instead for cheaper but more restrictive terms -- limited-time use, and restrictions on via what formats the finished series could be distributed. As some of those terms have expired since its first-run in the late eighties and early nineties, it's quite tough to even see Eyes today. This prized piece of American cultural history can't legally be shown on TV or sold new. You can't get it on DVD through Netflix or anywhere else. Used non-bootlegged VHS tapes go for about $1300 online.

Eyes on the Prize is a good example of what's tough about making documentaries. There's a real problem now with non-fiction filmmakers having to license the pop-culture that shows up while they're shooting. For example, go here for what "Mad Hot Ballroom" had to go through to clear the music in the film, including the "Rocky" ring tone that plays on a woman's cell phone for six seconds. And then there's the Smithsonian's deal with Showtime that GAO says is stymying the efforts of some independent filmmakers to use footage from their archives.

As they say, history is written by the keepers of creative content rights. Okay, I just made that up. But what's true is that our current regime of content-control is structured to benefit centralized authority, and not the rest of us in the trenches. That won't do. The good news on this is that we do have champions on the Hill on these issues. Should copyright and the control of creative content come up in the 110th Congress, look to Rep. Rick Boucher of southwest Virginia and Rep. Zoe Lofgren of northern California to take the lead. Boucher in particular will likely reintroduce his Digital Media Consumers' Rights Act -- in Boucher's words, an attempt to "restore the historical balance in copyright law."

Update [2006-12-23 15:7:20 by Nancy Scola]: Through a grant from the Ford Foundation and the Gilder Foundation, Eyes on the Prize was re-run and issued on DVD by PBS is fall. See more in the comments.