- The Washington Times - Thursday, August 8, 2002

Recording artists, record labels and Internet broadcasters yesterday all said they will appeal a decision by the librarian of Congress that set fees for copyrighted music that webcasters must pay beginning this year.
"You could tell after the decision that everyone had a problem with it," said Kenneth Steinthal, an attorney representing a group of large Internet broadcasters.
Yesterday was the deadline for appeals, which were filed with the U.S. Circuit Court of Appeals for the District of Columbia.
Clear Channel Communications Inc., the nation's biggest radio station owner with 1,200 stations, and a handful of other companies filed an appeal last month in the 3rd U.S. Circuit Court of Appeals in Philadelphia. Broadcasters, who already pay for music played on the airwaves, don't want to pay to stream radio signals to their Web sites.
Now artists, labels and Internet broadcasters are disputing the June 20 ruling by Librarian of Congress James H. Billington, who said webcasters must pay a royalty to artists and labels of 0.0007 cents per song, per listener. That's 70 cents per song for every 1,000 listeners. A three-member arbitration panel in the U.S. Copyright Office recommended in February that webcasters pay twice that amount. Mr. Billington rejected that recommendation in May, then issued his own ruling.
"While we view the librarian's decision to lower the rate to be a real improvement, we still think the rate structure should be better," Mr. Steinthal said.
Webcasters want a lower rate.
Artists and labels want a higher rate.
The appeals court could lower the royalty, increase it or leave intact the ruling by the librarian of Congress, who has jurisdiction over copyright disputes.
"The librarian's decision was based on a misguided reading of the record," said Hilary Rosen, chairman and chief executive of the Recording Industry Association of America. "The end result significantly undervalued the music used by Internet radio companies."
The 100,000-member American Federation of Musicians, which represents the people who play instruments, and the 80,000-member American Federation of Television and Radio Artists, which represents singers, filed their own appeal yesterday and will push for higher rates.
"We thought the evidence supported a much higher rate than the one the librarian supported," said Patricia Polach, an attorney for the American Federation of Musicians.
The debate over the royalty has revolved around the fate of webcasters, especially small hobbyists who have asserted they can't afford to pay much for music because they have little revenue.
The appeals process won't change an Oct. 20 deadline webcasters face. That's when they must make retroactive royalty payments on music played from 1998 through Sept. 1.
"I think a lot of webcasters are looking at Oct. 20 as a bankruptcy date," said Cynthia Greer, an attorney representing a group of 19 small webcasters who filed their own appeal yesterday.
An estimated 50 webcasters have shut down since Mr. Billington made his decision.
Michael Roe, president of Jacksonville, Fla., webcaster RadioIO.com, said Internet radio stations that are still in business now are likely to make royalty payments in October because they are hopeful they will win their legal battle and lower the cost of copyrighted music.
"We're in it for the long haul," Mr. Roe said.
But the webcasters' best chance for lower rates may not come through the appeal. It might come from a bill introduced last month by Rep. Jay Inslee, Washington Democrat, Rep. George Nethercutt, Washington Republican, and Rep. Rick Boucher, Virginia Democrat. Their bill would exempt small webcasters those with annual revenue less than $6 million from paying royalties on copyrighted music this year. Large webcasters receive no exemption under the bill. Small webcasters still would have to pay the fees, but not until a new, and presumably lower, royalty is set.
The recording industry opposes the bill.

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