Advanced Copyright Issues on the Internet - Fenwick & West LLP

proceeding. To be eligible for the SWSA rates, an eligible small webcaster was required tosubmit a completed and signed election form to SoundExchange by no later than the first date onwhich the webcaster would have to make a royalty payment under the SWSA. Subject to certainminimum annual fees, the royalty rates under the SWSA for Oct. 28, 1998 through Dec. 31, 2002were 8 percent of a webcaster’s gross revenues or 5 percent of its expenses, whichever is greater.For 2003 and 2004, the royalty rates were 10 percent of the webcaster's first $250,000 in grossrevenues and 12 percent of any gross revenues in excess of $250,000 during the applicable year,or 7 percent of the webcaster's expenses during the applicable year, whichever is greater. 2212Under Section 5 of the SWSA, the minimum annual fees ranged from $500 to $5,000, dependingupon the year and the gross revenues of the webcaster. 2213In June of 2003, the RIAA and educational and other tax exempt institutions reached anagreement under which college radio stations and other educational broadcast stations staffedsubstantially by students enrolled and the educational institution could pay even furtherdiscounted license fees for webcasting in the amount of a flat fee of $200 annually for the years1998 and 1999, $250 annually for the years 2000 through 2003, and a fee of $500 for 2004,except that educational institutions having fewer than 10,000 students could continue to pay only$250 in 2004. The agreement allowed noncommercial webcasters at other tax exemptinstitutions to pay an annual fee of between $200 and $500, depending upon whether thewebcasting is done through a single or multiple channels. The agreement applied retroactivelyto October 28, 1998 and lasted through the end of 2004. 2214In May of 2003, the Digital Media Association, the American Federation of Televisionand Radio Artists, the American Federation of Musicians of the United States and Canada, andthe RIAA, acting under the provisions of the SWSA, agreed on a proposal for royalty rates to bepaid by eligible non-subscription services for the 2003 and 2004 statutory licensing period andby new subscription services from 1998 through Dec. 31, 2004 (the “SWSA Agreement”), andsubmitted the proposal to the <strong>Copyright</strong> Office for possible adoption without a CARP. Theagreement also established proposed rates for Internet streaming of AM/FM broadcasts. On May20, 2003, the <strong>Copyright</strong> Office published the proposal for comment, which would establish theroyalty rates for each of the three categories of services set forth in the table below. 2215 On Feb.6, 2004, the <strong>Copyright</strong> Office adopted the proposal as a final rule. 2216Eligible Non-subscriptionServicesOption of paying royalties as follows:Per Performance Option – 0.0762 cents per performancefor digital audio transmissionsAggregate Tuning Hour Option – 1.17 cents per aggregatetuning hour for all channels and stations except channelsand stations where the programming consists of non-music2212 Id. at 78511.2213 Id. at 78512.2214 68 Fed. Reg. 35008 (June 11, 2003).2215 68 Fed. Reg. 27506 (May 20, 2003).2216 69 Fed. Reg. 5693 (Feb. 6, 2004).- 481 -