Vanderbilt Journal of Entertainment & Technology Law

First Page



In early 2007, the newly minted Copyright Royalty Board(CRB) handed down its first ruling, which set royalty rates for the digital performance of sound recordings. The CRB's ruling ignited a firestorm of concern among Internet radio broadcasters (webcasters) and their listeners. For some webcasters, the change to royalty rates constituted a 300-1200% increase over what was due under the previous scheme. This massive increase in royalties is attributable to the willing buyer/willing seller standard that the CRB is statutorily required to employ. This standard directs the CRB to construct one hypothetical marketplace and establish rates to which most buyers and sellers in the marketplace would agree.

The resulting royalties will put many webcasters out of business and hinder the growth of a new, evolving industry. This effect runs counter to the purpose of copyright law, which is to encourage creative output for the public good by awarding temporary monopoly rights to those who produce creative works. For this reason, 17 U.S.C. § 114(f)(2)(B) must be amended to direct the CRB to apply the willing buyer/willing seller standard in a manner that adequately accounts for the varied financial realities facing webcasters and honors the overarching policy of copyright law.

This article argues for a standard that expressly directs the CRB to construct a hypothetical marketplace for each actual marketplace. Part I discusses the CRB's application of the willing buyer/willing seller standard. Part II analyzes the shortcomings of the current standard and proposes a revised standard that accounts for the economic realities of the webcasting industry while honoring the objectives of copyright law.