The Third Circuit, in an opinion by Judge Richard D. Cudahy, sitting by designation from the Seventh Circuit, has just ruled that radio broadcasters must pay royalties for simultaneous webcasts of their radio shows, even though they are exempted from such royalties in their normal AM/FM broadcasting.
In the past, radio stations paid copyright royalties to content creators but not to the recording industry. The Digital Performance Right in Sound Recordings Act of 1995 continued this privilege by exempting "nonsubscription broadcast transmissions" from the more stringent copyright requirements of the Act. 17 U.S.C. § 114(d)(1)(A)(iii) (Supp. I 1995). This exemption even survived the Digital Millenium Copyright Act (DMCA), which otherwise added a great deal of copyright protection. In March of 2000, the RIAA petitioned the Copyright Office for a determination on whether simultaneous radio/webcasting broadcast was a "nonsubscription broadcast transmission." After following proper procedures, the Copyright Office promulgated a rule stating that simultaneous radio/webcasting broadcast did not fall under this category and therefore was not exempt from the payment of copyright royalties.
Rather than merely deferring to the Copyright Office's interpretation of the statute under the Chevron or Mead doctrines, the Third Circuit resolved this administrative law issue in the strongest way possible: by agreeing wholeheartedly with the Copyright Office's interpretation. After engaging in some lengthy statutory analyses, the Third Circuit concludes, "Section 114(d)(1)(A)'s nonsubscription broadcast transmission's exemption implicates only over-the-air radio broadcast transmissions, and does not cover the internet streaming of AM/FM broadcast signals."
The decision is Bonneville Int'l Corp. v. Peters, No. 01-3720 (3d Cir. Oct. 17, 2003). Read an article about the decision here. The decision itself is here [PDF].