Court Calls FCC Indecency Regulation 'Arbitrary and Capricious'
This week, the 2nd Circuit U.S. Court of Appeals called out the FCC for their ever-morphing indecency standards. For the past few years, the FCC has flip-flopped on whether broadcasting accidental profanities on TV and radio should be deemed indecent. Historically, fleeting expletives had not been subject to federal fines, but in 2003 the FCC changed its mind, reversing their earlier decision on Bono's comments during a live awards ceremony, and sending broadcasters into a state of utter confusion. Fox took the FCC to Federal Appeals Court back in January, and thankfully, 2 out of 3 judges view the FCC's inconsistent indecency rules in danger of violating the First Amendment. The FCC can either reconsider its rulings on Bono, Cher, and Nicole Richie, or they can appeal the 2nd Circuit's decision to the Supreme Court. If the FCC opts for taking it to the Supremes, this case will shed a lot of light on whether the highest court in our country is populated by reasonable individuals committed to protecting the constitution, or politically-influenced pawns.
UPDATE (6/6/07): FCC Chairman Kevin Martin responds to the court ruling with an expletive-laden statement! Stick that on your public record! O, sweet justice, viva la First Amendment!
SoundExchange's Dirty Dealings
The battle between webcasters and SoundExchange (webcasting royalty collectors) is still raging over royalties. Earlier this year, the Copyright Royalty Board approved a hike in webcasting royalty fees so large that the increase would put many online stations out of business. An enormous backlash erupted from webcasters large and small, commercial and non-commercial, backed by the Save Net Radio campaign. NPR asked the CRB to provide an exception to the rates for non-commercial stations with large online audiences, but this was denied. Congress eventually caught wind of the storm, and wrote up a few bills to nix the CRB's rates, but no further progress has been made. In a surprise move, the CRB pushed the inception of their new rate scheme forward a few months, but as July 15 creeps up, few negotiations have taken place between webcasters and SoundExchange.
The few settlement offers that SoundExchange did offer up to webcasters are, unfortunately, useless to the vast majority of stations that will be affected by the rate hike. I imagine that Congress pressured SoundExchange to work something out, and in return SE wrote up a few PR-driven "deals" to get the Reps and Senators off their asses. Here are the details of SE's bum deals:
1. Small webcasters running on less than $250k/yr will pay 10% of their revenue to SoundExchange, and those with revenue up to $1.25 million will have to pay 12%. Any station with a budget over $1.25 million will be charged as per the CRB's new rate scheme. This sounds like a good deal, until you consider the fact that satellite radio companies XM and Sirius pay the highest royalties out of anybody, and their rate is only 7.5% of annual revenue. And 12% is supposed to be a "deal" for fledgling businesses? Here's the story.
2. SoundExchange offered a "private agreement" to a few NPR-affiliated non-commercial webcasters. They'll be charged a low royalty rate, provided that they don't have a large listenership. If they have more than 200 simultaneous listeners on their stream, the fees increase significantly. Trouble is, if your station wasn't part of the "private agreement", this "deal" doesn't apply.
In the meantime, NPR has filed a court request for an emergency stay on the CRB's new rates. Let's hope that SE comes up with a reasonable compromise for small webcasters and non-commercial stations soon...