CARP's CRAP FLUSHED DOWN THE TOILET! (May 22, 2002)

ORDER

On February 20, 2002, the Copyright Arbitration Royalty Panel (CARP) reported its determination to the Librarian of Congress in the above-captioned proceeding. In accordance with 17 U.S.C. 802(f), the Librarian is given 90 days from date of delivery of a CARP report to review the determination and issue a decision setting forth the final royalty fee and terms of payment. However, if the Librarian rejects the CARP's determination, section 802(f) provides an additional 30 days for the Librarian to render his final determination.

The Register of Copyrights recommends, and the Librarian agrees, that the Carp's determination must be rejected. A final decision will be issued no later than June 20, 2002.

DATED: May 21, 2002

SO RECOMMENDED.

Marybeth Peters,
Register of Copyrights.

SO ORDERED.

James H. Billington,
Librarian of Congress.

More on CARP CRAP Rejection

Internet music lovers, fearful that their favorite Web broadcasters will go out of business, won a reprieve Tuesday when the government rejected proposed royalty rates that webcasters considered too high.

The US Copyright Office has rejected the CARP panel's royalty fee recommendations on May 21st. The decision, deemed to be made today, was made earlier than anticipated. A final decision will be made by 6/20.

Internet radio lead crusader, RAIN principal Kurt Hanson (www.kurthanson.com) was obviously pleased with the decision: "I think this is a good sign for webcasters. The Copyright Office had to be dissatisfied with the performance of the CARP panel. These were three people without sufficient experience in copyright law, with a limited period of time, who I believe misinterpreted the entire assignment. They were supposed to set a royalty that most clearly represents the rates and terms that wouldn't have been negotiated in the marketplace between a willing buyer and a willing seller. They misread the opening statement of the assignment, which cased the whole process to spiral out of control. I hope that the Copyright Office will determine that the rejection of royalties based on percentage of revenues is arbitrary on the part of the CARP. It just kind of decided it wouldn't work, ignoring 60 years of history saying it does work. By not setting a rate somewhere in the ballpark of what composers get as their royalty, it ignores decades of experience from around the world."

He adds, "Rejecting the ruling is no absolute guarantee that it will bring about a rate that keeps the industry alive and healthy, but it's exactly what the webcasters were hoping for."

The Librarian of Congress has rejected proposed royalty rates that would have charged Internet broadcasters based on each Web user that listens in.

Librarian James H. Billington will issue a final decision setting the new rates by June 20, the U.S. Copyright Office said Tuesday.

The Copyright Office ruled in December 2000 that organizations distributing music and other radio content over the Internet must pay additional fees to record companies that hold song copyrights.

In February, an arbitration panel proposed rates based on each person who is receiving a broadcast sent online. The rates ranged from .07 of a penny per song for a radio broadcast to .14 of a penny for all other copyrighted audio sent on the Internet.

Webcasters had sought lower rates than those proposed in February by a government panel. They said those rates - up to $1.40 per song heard by one thousand listeners - would cost larger webcasters hundreds of thousands of dollars annually, more than they get from advertising or listener contributions. The fees would have been retroactive to 1998.

Many webcasters said they would have to shut down if the proposed rates were approved. Record companies do not receive fees for songs played only on radio broadcasts.

The recording industry had wanted higher rates, while companies that deliver music and video online had sought lower ones. The proposed rates would have cost larger webcasters hundreds of thousands of dollars annually.

Jonathan Potter, executive director of the Digital Media Association, which represents webcasters, said Billington's rejection of the proposed rates "offers hope that the final royalty will be more in line with marketplace economics."

Earlier this month, hundreds of Internet broadcasters joined in a "Day of Silence" to protest the proposed royalties that many of them said would put their small operations out of business and deal a blow to musical diversity online in favor of a few large outlets playing the same roster of Top 40 hits.

Librarian of Congress James H. Billington, who oversees the U.S. Copyright Office, said he would issue a final decision by June 20 laying out the royalty fees to be imposed. He did not explain why the proposed rates were rejected.

Opponents can appeal to the U.S. Court of Appeals for the District of Columbia Circuit within 30 days of the final ruling. The court could modify or set aside the decision if it finds Billington was highly unreasonable.

Internet radio now is popular in offices and is gaining wider use in homes as more people get high-speed connections. It is expected to become even more mainstream as wireless devices proliferate, allowing listeners to tune in while walking or driving.

Webcasters, as well as over-the-air radio stations, already pay composers and music publishers royalties for the music they play, based typically on a percentage of their revenues.

But traditional radio broadcasters have been exempt from paying the royalties for each song played that now are being applied to webcasters. Broadcasters successfully argued before lawmakers that they already were promoting the music.

After the recording industry failed to impose those new royalties, which would go to music labels and musicians, on traditional broadcasters, the industry turned to webcasters. A 1998 law granted the industry its wish.

Sony's 'copy-proof' CD fails to silence hackers

GET A FELT MARKER!

That's right! Sony Music's potentially damaging disc copy-protection technology can be easily defeated with a decidedly low-tech method - scribbling around the rim of a disc with a cheap felt-tip marker available everywhere.

Users have pilloried Sony for deploying "hi-tech" copy protection that can be defeated by paying a visit to a stationery store.

"I wonder what type of copy protection will come next?" one posting on alt.music.prince read. "Maybe they'll ban markers."

Major music labels, including Sony and Universal Music, have begun selling the allegedly-illegal "copy-proof" discs as a means of halting the use of ripping their tracks into MP3 files, which are then shared over file-sharing networks for others to receive for free, which cuts into record sales.

The new technology, embedded with Sony's "Key2Audio" technology, aims to prevent consumers from copying, or "burning", music onto recordable CDs or onto their computer hard drives.

Why anyone would bother to rip an album that sucks such as those by Celine Dion remain a mystery.

After an initial attempt to play the disc on a PC resulted in failure, the edge of the shiny side of the disc was blackened out with a felt tip marker. The second attempt with the marked-up CD played and copied to the hard drive without a hitch.

Internet postings claim that tape or even a sticky note can also be used to cover the security track, typically located on the outer rim of the disc. And there are suggestions that copy protection schemes used by other music labels can also be circumvented in a similar way.

Sony's proprietary technology, deployed on many recent releases, works by adding a track to the copy-protected disc that contains bogus data.

Because computer hard drives are programmed to read data files first, the computer will continuously try to play the bogus track first. It never gets to play the music tracks located elsewhere on the compact disc.

The effect is that the copy-protected disc will play on standard CD players but not on computer CD-Rom drives, some portable devices and even some car stereo systems.

Some Apple Macintosh users have reported that playing the disc in the computer's CD drive causes the computer to crash. The cover of the copy-protected discs contain a warning that the album will not play on Macintoshes or other personal computers.

Sony Music Europe has taken the most aggressive anti-piracy stance in the business. Since last fall, the label has shipped more than 11 million copy-protected discs in Europe, with the largest proportion going to Germany, a market label executives claim is rife with illegal CD-burning.