Web-Casters See a Temporary Victory in Delay of Royalties

Web-casters rejoiced this week--one saying they received a “stay of execution”--after the Library of Congress rejected proposed royalty fees for playing music on the Internet. The music industry, on the other hand, pledged to keep fighting for what it considers fair compensation.

Web-casters--both Internet-only radio stations and terrestrial broadcasters simulcasting their music on the Web--said the fees proposed to the U.S. Copyright Office by a panel of arbitrators would have been too expensive and would have forced them out of business. But the Recording Industry Assn. of America and unions representing singers and musicians said it is unfair for Web-casters to play music without paying performers or record companies for the privilege.

The arbitration panel in February recommended that Internet-only Web-casters pay .14 cents per song per listener, that radio stations simulcasting on the Internet pay half that and that noncommercial broadcasters pay .02 cents. The minimum annual fee would be $500, but Web-casters said the royalties, retroactive to 1998, could run into the hundreds of thousands of dollars.

The recording industry said the fees weren’t high enough and that the Web-casters shouldn’t be allowed to operate their businesses without paying to use the music.

After intense lobbying in Congress and at the Copyright Office by both sides, Librarian of Congress James H. Billington, who oversees the Copyright Office, rejected the proposed fee schedule and said he would issue a final decision no later than June 20. He did not give a reason for his decision.

Because both sides contested the proposed fees, many said they weren’t surprised by the rejection. But wary Web-casters said they need to keep pressing the issue, lest Billington make only cosmetic changes to the proposal. They insist that small Web-casters will be able to stay in business only if the fees are based on a percentage of their revenues.

The Recording Industry Assn. responded to the news saying, “We look forward to the conclusion of this process on June 20 and to the day when artists and labels finally get paid for the use of their music.”

SoundExchange, the association’s fee-collection arm, said it hopes the sides can come to an agreement and “find creative solutions to enable Web-casting to thrive while providing recording artists and those who invest in sound recordings a fair and equitable royalty in return.”