Volume 95 - Virginia Law Review

Internet Radio: The Case for a Technology Neutral Royalty Standard

Since its debut in the mid-1990s, internet radio (or “webcasting”) has grown rapidly and now attracts more than 69 million listeners very month—more than a quarter of all U.S. internet users. Internet radio listeners can select virtually any conceivable genre of music and listen to their selection anywhere they have an internet connection.

All digital radio providers—internet radio, digital cable radio, and satellite radio—must pay a royalty for the performance of the sound recording. This royalty is imposed by § 114 and § 112 of the Copyright Act and the rate is determined by the Copyright Royalty Board (CRB). In 2007, the CRB issued a rate determination that threatens to shut down internet radio. The royalties required by the decision would demand internet radio operators to pay rates approaching or even exceeding 100% of revenue. Meanwhile, for the sound recording performance royalties for the other forms of digital radio—cable radio and satellite radio—the CRB adopted rates of 6-15% of revenue. Thus, the current copyright regime has a strong bias in favor of certain technologies providing digital radio (cable radio and satellite radio) and against another (internet radio), resulting in disproportionately high royalties for internet radio. While a variety of agreements between webcasters and SoundExchange adopted under the Webcaster Settlement Acts of 2008 and 2009 have delayed the onset of industry crushing royalties, the threat continues to hang over internet radio’s future.

In this paper, I provide an overview of internet radio and the current copyright royalty regime, and I present and critique the recording industry’s argument that internet radio is a threat. I then analyze the economic impact of current royalty rates on internet radio and contrast it with the impact of the royalties for the other forms of digital radio. After showing the devastating impact of the current royalty rates, I analyze the source of the royalty rate inequities. I demonstrate that the disparate treatment of the different forms of digital radio has resulted from the statutory imposition of two standards for determining digital radio royalties: “§ 801(b)(1)” vs. “willing buyer, willing seller.” I then make constitutional and policy arguments for having a single, technology neutral standard for determining the royalties for digital radio. I conclude by demonstrating that the standard that should be adopted is the § 801(b)(1) standard, and I propose amendments to the Copyright Act to effectuate the change. Amending the Copyright Act to apply a consistent, technology neutral standard would ensure that all forms of digital radio continue to thrive and would ensure that the music keeps playing for the 69 million Americans who tune in to internet radio every month.

For the Appendix referenced in this Note, please see http://www.jstor.org/stable/27759978

Incarceration, Accommodation, and Strict Scrutiny

The Religious Land Use and Institutionalized Persons Act (RLUIPA) requires the application of strict scrutiny to policies substantially burdening the religious exercise of prisoners. Although RLUIPA was passed without dissent, critics and commentators have tended to accept three skeptical claims about the use of strict scrutiny in this context: (1) changes in the formal level of scrutiny applicable to claims for religious accommodation are irrelevant to case outcomes; (2) even the most sympathetic statutory language will not improve prisoners’ chances of success in seeking accommodations; (3) using the language of strict scrutiny in prison cases will diminish its force in other areas of the law.

This Note challenges these skeptical conclusions. Since RLUIPA was passed in 2000, federal courts have reviewed hundreds of claims brought by prisoners seeking accommodations. Some federal circuit courts have continued to defer to the judgment of prison administrators when denying exemptions. Other federal courts, however, are employing a more rigorous form of review, taking a “hard look” at prison policies that burden religion, and reviewing carefully the claims of prison administrators. Moreover, rather than diluting strict scrutiny in other areas of the law, these courts are using doctrine from outside of the accommodation context to resolve prisoner claims. The emergence of a searching form of review in the prison context is surprising. After detailing an emerging conflict among the federal courts of appeal, this Note argues that firm constitutional footing, statutory specificity, and the importation of searching review from equal protection and free speech cases all help to explain this unexpected development. This Note concludes with some thoughts about how proponents of religious accommodation should proceed in light of the limited but real success of RLUIPA.

The State of State Anti-takeover Law

This Article is the first to examine systematically state antitakeover law outside Delaware. It conducts a research of all available cases to find whether states with pill endorsement and other constituency statutes follow Delaware’s enhanced fiduciary duties or replace them with weaker standards. It finds substantial variations from Delaware’s law.

Unlike Delaware, most of the states with relatively strong other constituency and pill endorsement statutes do not impose enhanced fiduciary duties on managers in change-of-control situations. Instead, they apply only the ordinary business judgment rule to management’s use of antitakeover tactics.

This Article has implications for antitakeover law, the market for corporate law, and the desirability of federal intervention. In particular, it provides support for adopting Delaware’s enhanced fiduciary duties—Unocal, Revlon, and Blasius—as federally imposed minimum standards. This would not only improve state antitakeover law outside Delaware, but may also result in improvements to Delaware law since Delaware is currently dragged down by other states.

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