US court rules that broadcasters must pay producers for internet music streaming

London, August 8, 2001 - IFPI, representing the international recording industry, has welcomed a US court decision that broadcasters must pay royalties to producers of recordings for 'webcasting' or 'streaming' their music over the internet.

The ruling was issued by the United States District Court for the Eastern District of Pennsylvania on August 1, and sets an important precedent that internet activities must be treated differently from traditional broadcasting. In the US, unlike many other countries, it is established practice that broadcasters have not paid record labels for the broadcasting of their music, despite the public appeal and financial benefits that music provides for traditional broadcasters' services.

Among other reasons, the court found that the global nature of internet streaming, as well as the need to protect all rightsholders from high-quality internet copying, made the more lax traditional rules for broadcasting inapplicable:

"Internet streaming by AM/FM broadcasters is entirely different from traditional over-the-air broadcasting because it is global in nature, as opposed to being limited to geographically defined areas, and because the digital nature of the transmissions, as opposed to the analog nature of traditional over-the-air broadcasts, significantly enhances the ability to create high-quality copies from the transmissions." (Opinion at 17-18.)

Allen Dixon, General Counsel and Executive Director of IFPI said, "As a technical, practical and legal matter, streaming is not broadcasting. By recognising this important fact, the US court's decision paves the way for the recording industry to continue to develop new and truly global licensing models, and to establish legitimate e-commerce over the internet."

Background

In December 2000, the US Copyright Office ruled that AM/FM broadcasters - who are currently exempt from paying royalties when they broadcast over the air - are 'not' exempt when they transmit ('stream') digitally over the internet. In response, the National Association of Broadcasters (NAB), along with six broadcasters, filed a legal action challenging the Copyright Office's ruling. IFPI affiliate RIAA then intervened as party-defendants on the side of the Copyright Office. The case is officially titled Bonneville International Corp. v. Peters, and can be found in full text at http://www.paed.uscourts.gov/documents/opinions/01D0617P.HTM.

For further information contact:
Fiona Harley, IFPI Communications, tel: +44 20 7878 7900