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A bill before Congress would for the first time require radio broadcasters to pay royalty fees to recording artists and record labels pursuant to the Copyright Act. The proposed Fair Play Fair Pay Act (H.R. 1733) would “[make] sure that all radio services play by the same rules, and all artists are fairly compensated,” according to Congressman Jerrold Nadler (D-NY). … AM/FM radio has used whatever music it wants without paying a cent to the musicians, vocalists, and labels that created it. Satellite radio has paid below market royalties for the music it uses … The bill would still allow for different fees for AM/FM radio, satellite radio and Internet radio, but it would mandate a “minimum fee” for each Read More ›

Chairman Thomas E. Wheeler of the Federal Communications Commission unveiled his proposal this week for regulating broadband Internet access under a 1934 law. Since there are three Democrats and two Republicans on the FCC, Wheeler’s proposal is likely to pass on a party-line vote and is almost certain to be appealed. Free market advocates have pointed out that FCC regulation is not only unnecessary for continued Internet openness, but it could lead to years of disruptive litigation and jeopardize investment and innovation in the network. Writing in WIRED magazine, Wheeler argues that the Internet wouldn’t even exist if the FCC hadn’t mandated open access for telephone network equipment in the 1960s, and that his mid-1980s startup either failed or was Read More ›

Supporters of Title II reclassification for broadband Internet access services point to the fact that some wireless services have been governed by a subset of Title II provisions since 1993. No one is complaining about that. So what, then, is the basis for opposition to similar regulatory treatment for broadband? Austin Schlick, the former FCC general counsel, outlined the so-called “Third Way” legal framework for broadband in a 2010 memo that proposed Title II reclassification along with forbearance of all but six of Title II’s 48 provisions. He noted that “this third way is a proven success for wireless communications.” This is the model that President Obama is backing. Title II reclassification “doesn’t have to be a big deal,” Harold Read More ›

As I and others have recently noted, if the Federal Communications Commission reclassifies broadband Internet access as a “telecommunications” service, broadband would automatically become subject to the federal Universal Service tax–currently 16.1%, or more than twice the highest state sales tax (California-7.5%), according to the Tax Foundation. Erik Telford, writing in The Detroit News, has reached a similar conclusion. U.S. wireline broadband revenue rose to $43 billion in 2012 from $41 billion in 2011, according to one estimate. “Total U.S. mobile data revenue hit $90 billion in 2013 and is expected to rise above $100 billion this year,” according to another estimate. Assuming that the wireline and wireless broadband industries as a whole earn approximately $150 billion this year, the Read More ›

Would the Federal Communications Commission expose broadband Internet access services to tax rates of at least 16.6% of every dollar spent on international and interstate data transfers–and averaging 11.23% on transfers within a particular state and locality–if it reclassifies broadband as a telecommunications service pursuant to Title II of the Communications Act of 1934? As former FCC Commissioner Harold Furchtgott-Roth notes in a recent Forbes column, the Internet Tax Freedom Act only prohibits state and local taxes on Internet access. It says nothing about federal user fees. The House Energy & Commerce Committee report accompanying the “Permanent Internet Tax Freedom Act” (H.R. 3086) makes this distinction clear. The law specifies that it does not prohibit the collection of the 911 Read More ›

A report by NetNames for the Digital Citizens Alliance has found that the “overwhelming use of cyberlockers is for content theft.” At least 79-84% of sampled files on 30 of the most popular online file sharing destinations infringed copyright, according to the analysis.
The report also estimates that the sites generate profit margins of 88-96% on combined revenue of over $95 million per year. The primary sources of income are premium account subscriptions enabled by payment processors such as VISA and MasterCard, and advertising.

Every cyberlocker that offered paid premium accounts to users provided the ability to pay for those subscriptions by Visa or MasterCard, with only one exception. Only a single cyberlocker accepted PayPal.

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The House Judiciary Committee examined the “first sale” doctrine at a recent field hearing in New York City as part of the committee’s comprehensive review of copyright. The first sale doctrine made perfect sense during the Industrial Age, but in some respects it’s problematic for the Digital Age. Consumers have the right to give away, lend or sell a book that they own, thanks to a 1908 Supreme Court decision that was subsequently codified by Congress at 17 U.S.C. §109(c). There’s no dispute that “[p]hysical copies of works in a digital format, such as CDs or DVDs, are [covered] in the same way as physical copies in analog form.” However, consumers with an Internet connection are downloading more and more digital content from remote servers pursuant to license agreements. And the first sale doctrine does not apply to digital files that are transmitted from machine to machine, according to the Copyright Office, because transmission results in two copies (one on each machine).

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Chairman and CEO Masayoshi Son of SoftBank again criticized U.S. broadband (see this and this) at last week’s Code Conference. The U.S. created the Internet, but its speeds rank 15th out of 16 major countries, ahead of only the Philippines. Mexico is No. 17, by the way. It turns out that Son couldn’t have been referring to the broadband service he receives from Comcast, since the survey data he was citing–as he has in the past–appears to be from OpenSignal and was gleaned from a subset of the six million users of the OpenSignal app who had 4G LTE wireless access in the second half of 2013. Oh, and Son neglected to mention that immediately ahead of the U.S. in Read More ›