Webcasters May Get Reprieve on Royalties

Offering a potential lifeline to hundreds of Internet radio stations, the chairman of the House Judiciary Committee introduced a bill Thursday to give Webcasters a six-month reprieve on the new royalties they must pay to record labels and artists.

Rep. F. James Sensenbrenner Jr. (R-Wis.) plans to try to push the bill through the House next week, using a procedural shortcut typically reserved for noncontroversial proposals, an aide said. Under this approach, the bill must be approved by a two-thirds vote.

At issue are the controversial royalties set by the Librarian of Congress, who based his finding on a proposal from federal arbitrators. Starting in mid-October, commercial broadcasters on the Net must pay 0.07 cent per song for each listener tuned in, or $92 per listener per year for stations playing a steady diet of music.

Hundreds of stations have shut down in the face of those fees, and many more were expected to close rather than pay the three years of accumulated royalties that were due Oct. 20.

Sensenbrenner’s bill would delay the royalties for six months, giving Congress more time to consider changing the way royalties are set. Advocates say the current system leads to unfair results, such as the arbitrators’ proposal, which was based entirely on the royalties deal that online powerhouse Yahoo Inc. struck with the Recording Industry Assn. of America.

A spokesman for the RIAA said the bill came as a surprise, “considering how productive our discussions with the Webcasters have been.” But a negotiator for the Webcasters, Kevin Shively of Beethoven.com, said the two sides remained far apart on the two most important issues: what the lower rate would be and which Webcasters would qualify.

“I would call [the bill] nothing short of a new lease on life,” Shively said.

Rep. Jay Inslee (D-Wash.), who had introduced a bill to change how the royalties were set, said lawmakers “have heard all over the country that people want to keep Webcasting alive.” Although a group of House members were trying to come up with a compromise, Inslee said, “there just wasn’t enough time to come up with a solution that was fair to everybody ... particularly with Iraq pushing everything else off the plate.”

RIAA officials declined to say whether they would oppose the bill.