Webcaster Royalty Measure Stalls in the Senate

A bill designed to save small Internet radio stations from bankruptcy foundered Thursday, failing to win final approval from the Senate before lawmakers adjourned until after the November elections.

Many Webcasters face a potentially ruinous day of reckoning Sunday, when four years’ worth of back royalties are due to be paid.

The bill by House Judiciary Committee Chairman F. James Sensenbrenner Jr. (R-Wis.), which was passed by the House last week, would have slashed royalty payments that small Webcasters must make to record labels and artists.

The Copyright Office is expected to rule today on requests from Foster City, Calif.-based Live365 and college radio stations to delay the royalties, while other Webcasters have appeals pending in federal court. The Senate leadership also may revive the bill if all outstanding objections are removed.

A source close to the proceedings said the bill was blocked unexpectedly by Sen. Jesse Helms (R-N.C.) at the request of unidentified over-the-air broadcasters. Representatives of Christian radio stations had voiced concerns about the bill’s potential impact on the royalties they pay to songwriters, among other issues.

Helms could not be reached late Thursday.

But the measure had disappointed or displeased many interest groups, including the radio industry’s main trade association, telecommunications firms, college radio stations, Webcasting hobbyists and mid-size and large Webcasters. They complained that the bill either set a bad precedent or failed to provide enough relief.

The main proponents were a group of small commercial Webcasters, the Recording Industry Assn. of America and artists’ unions. Expressing surprise and disappointment at the bill’s failure to pass, Hilary Rosen, chief executive of the RIAA, said, “We hope that the Senate will work this out quickly. All parties who support this legislation should contact their senators to urge passage of this bill.”

At issue were the royalties for record labels and performing artists that the librarian of Congress set in July. Basing his ruling solely on an agreement between Yahoo Inc. and the record labels, the librarian called for commercial Webcasters to pay about $100 annually per listener, and noncommercial stations to pay nearly $30 annually per listener.