- The Washington Times - Thursday, July 18, 2002

The nation's largest broadcasters are appealing a court ruling that would force them to pay millions of dollars in additional royalties to record companies.

Clear Channel Communications Inc., the nation's biggest radio station owner with 1,200 stations, and a handful of other companies filed an appeal late Tuesday in the 3rd U.S. Circuit Court of Appeals in Philadelphia.

Broadcasters, who already make payments for music played on the airwaves, don't want to pay for the use of music they send out to Web sites. The National Association of Broadcasters, an industry group representing radio stations, joined the appeal.

"We're hopeful the court will side with broadcasters and consumers and allow this fledgling new service to flourish," National Association of Broadcasters spokesman Dennis Wharton said.

The stations filed their appeal nearly a month after the librarian of Congress, who oversees the copyright office and mediates royalty disputes, said Internet radio stations and standard radio stations streaming songs to Internet sites must pay artists and record labels a royalty for copyrighted music.

Librarian of Congress James H. Billington said June 20 that webcasters and radio stations must pay 0.0007 cents per song, per listener. That's 70 cents per song for every 1,000 listeners.

Though Mr. Billington made his decision last month, broadcasters have been involved in the dispute about royalties for nearly two years.

In December 2000 the U.S. Copyright Office agreed with the Recording Industry Association of America and ruled that radio stations streaming signals to the Web must pay royalties.

Last August, a district court rejected the broadcasters' motion to change the copyright office's finding.

Broadcasters and webcasters already pay about 4 percent of revenue to compensate composers and music publishers. Radio stations have never paid the labels royalties for sound recordings. That's because Congress decided radio stations promote the labels' copyrighted music when they play songs on the radio, and that trade-off exempts them from having to make any monetary compensation to labels.

Broadcasters believe that exemption should extend to the Web.

The 1998 Digital Millennium Copyright Act "cleary and unambiguously" exempts AM and FM stations from paying royalties for songs streamed to the Web, the radio stations said in the 64-page brief filed with the court.

"We are hopeful that the court will reject the broadcasters' appeal for the same reasons that the copyright office and the district court did. Rather than seek special treatment from the courts, we encourage the broadcasters to work with the labels and artists as our industries transition into new businesses," said Steven Marks, senior vice president of business and legal affairs for the Recording Industry Association of America.

Rather than pay the new royalty the first payments are due Oct. 20 many radio stations have stopped streaming signals to Web sites, said George Bundy, chief executive of San Francisco research firm BRS Media Inc.

"Many smaller stations have pulled their streams based on the librarian of Congress's decision. Bills are going to come due soon, unless there's some type of intervention," Mr. Bundy said.

There were 5,598 standard radio stations streaming songs to Web sites in April 2001. That fell to 4,557 stations last month, Mr. Bundy said.

"We were streaming as a service to our listeners who may not be able to pick up our signal when they're at work in an office building. But when it looked like it would become costly, we had to stop," said Sam Milkman, program director at WMMR in Philadelphia.

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