Congress Approves Web Radio Royalty Deal

Reuters | November 15, 2002 | Andy Sullivan

[HAL9000]

WASHINGTON (Reuters) - The U.S. Congress approved a deal early Friday morning that would allow small Internet-based radio stations to pay lower royalty rates to the musicians and record labels whose songs they use.

The move amounts to a stay of execution for many smaller "Webcasters," who had feared the established royalty rate that went into effect Oct. 20 would have forced them offline, narrowing the market to a few large players like America Online.

In a late-night session, both the House of Representatives and the Senate passed a bill that would suspend payments for small Webcasters until Dec. 15, giving them a chance to finalize a discount rate they had previously hammered out with musicians and record labels.

Industry players on all sides hailed the bill, saying it would allow hobbyists, small independent operators and niche players to continue streaming radio-style broadcasts over the Internet.

"Today's congressional approval of the Small Webcaster Settlement Act of 2002 ensures that our audience will continue to enjoy Onion River Radio's 'free-form' style of programming," said Frank Schlieman, founder of Onion River Radio, an independent Vermont Webcaster.

The bill, sponsored by lame-duck North Carolina Republican Sen. Jesse Helms, would allow copyright holders and Webcasters to forgo the established rate set by the Library of Congress and negotiate separate deals on their own depending on the status of the Webcaster.

GREATER FLEXIBILITY

Large players like AOL and Clear Channel Communications Inc. will make payments based on the established rate of roughly 1 cent per hour for each listener, while smaller operators will be able to pay a percentage of their revenues or expenses.

Noncommercial operators such as college and religious stations will not have to make royalty payments for another six months as they reach a deal of their own. Mom-and-pop hobbyists would be able to choose to be counted as a nonprofit or a small business.

"It's good for several classes of people and has been crafted to prevent harm to others," said Kurt Hanson, an industry consultant who publishes and industry newsletter. "It gives the hobbyist class a chance."

A similar bill that spelled out the alternate payment options for small Webcasters -- up to 12 percent of revenues or 7 percent of expenses -- passed the House last month, but stalled in the Senate after religious broadcasters objected that the rates were still too high.

The revised bill removes any mention of specific rates, instead giving royalty-collection clearinghouse SoundExchange the authority to negotiate discounts on behalf of musicians and record labels.

SoundExchange will likely stick with the rates hammered out previously, executive director John Simson said.

"That's the intention," he said. "I'm glad we're moving ahead."

Mike Roe, whose adult-format Radio IO reaches 180,000 listeners each month, said the deal would allow him to stay in business by reducing his royalty payments from $10,000 to $800 annually.

"I'm happier with it, in a sense," Roe said of the new bill. "It just keeps getting better and better."

A negotiator who represented musicians said the greater flexibility would allow more music to be played and more royalties to be collected.

"For artists it's a great thing because it enables small Webcasters to continue to broadcast our members' work," said Ann Chaitovitz, national director of sound recordings for the American Federation of Television & Radio Artists.

Religious broadcasters and large record companies released a joint statement saying they supported the bill, as did a trade association that represents some large Webcasters.

[concentric circles]

SoundExchange will likely stick with the rates hammered out previously...

So how will this help the small webcasters?

[HAL9000]

So how will this help the small webcasters?

According to the article - the new law will allow one webcaster with 180,000 listeners to reduce his royalty payments from $10,000 to $800 annually.

[Bogey780]

Screw them. I'm not buying any music nor have I cared to listen to any in months.

They sicken me.