• Recording Association Faces Anti-Trust Litigation
  • September 30, 2003 | Author: Theodore F. Claypoole
  • Law Firm: Womble Carlyle Sandridge & Rice - Charlotte Office
  • Last week a group of Internet radio stations sued the Recording Association of America (RIAA) claiming that the Association illegally maintained a monopoly over the broadcast of sound recordings, and claiming that the Association improperly restrained trade in this market. The suit may redefine the complex battleground over online music distribution.

    The RIAA, which has made news lately for suing consumers who participated in music file sharing, has acted as the voice of copyright holders in the music recording industry. If the plaintiff webcasters are successful, then RIAA strategy of attacking perceived Internet copyright infringers may be in jeopardy, as well the RIAA tactic of negotiating a license with a chosen target and then attempting to apply the same license terms to other industry players.

    The lawsuit addresses the RIAA's impact on webcasting or Internet radio, not on private file downloading. Webcasters provide music, talk and other sound deliveries similar to traditional land-based radio content. Smaller webcasters have been complaining that current license rates for broadcasting music online do not fit their business models and would drive them into bankruptcy.

    The law suit claims that RIAA, and the major mainstream music distribution companies -- Universal Music Group, Warner Music Group, Bertelsmann Music Group, Sony Music Entertainment and Capitol-EMI Music - acted in concert to set music licensing prices unreasonably high for the webcasting industry. Specifically, the Webcaster Alliance, Inc. accuses the defendants of negotiating unfair terms with large web companies like Yahoo!, then imposing those prices on the smaller webcasters.

    Music royalty rates for webcasts have been contentious for the past year as rules for payments have been set by the U.S. Library of Congress pursuant to a 1998 Congressional copyright act. Congress passed a bill attempting to protect the interests of small webcasters, but many felt that the new rules would not help them survive.

    Ann Gabriel, president of Webcaster Alliance, Inc. stated: "The RIAA agenda is patently clear. We have watched the RIAA's actions which have the effect of wiping out an entire industry of independent webcasters who represent freedom of choice and diversity for Internet radio listeners. It is time for the RIAA to be held accountable for years of manipulating an entire industry in order to stifle the growth of independent music and control internet content and distribution channels. Their ruthless campaign has also had the devastating effect of destroying the hopes and dreams of thousands of independent Internet radio stations. It is time for us to stand up to the RIAA and fight for the American consumer's freedom of choice."