Appeals Court Rejects Web Radio Ruling Challenge | Adweek Appeals Court Rejects Web Radio Ruling Challenge | Adweek
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Appeals Court Rejects Web Radio Ruling Challenge

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PHILADELPHIA -- A federal court has thrown out a challenge from the broadcasting industry against the U.S. Copyright Office, which ruled late last year that radio stations must pay extra royalties to broadcast over the Internet.

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.

U.S. District Judge Berle M. Schiller ruled Wednesday that although it might make sense for Congress to treat Internet broadcasts in the same manner as traditional broadcasts, the law doesn't 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," Mr. Schiller wrote. "It is this interplay between Congress and the Copyright Office which 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.

Record companies don't receive fees for songs played only on radio broadcasts.

"Broadcasters currently pay in excess of $300 million annually in music licensing fees to compensate songwriters and music publishers," said Edward O. 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."

The ruling was hailed as a victory by the Recording Industry Association of America. Steven M. Marks, the association's senior vice president for business affairs, said radio listeners shouldn't notice any difference as a result of the ruling.

"Any licensing fees that these companies would be paying would pale in comparison ... to the cost to stream their signal over the Internet," Mr. Marks said.

Compiled from Dow Jones Newswires and other sources. Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved