- The Washington Times - Saturday, July 27, 2002

Small Internet radio broadcasters would not have to pay a new royalty on copyrighted music this year if Congress approves a bill introduced yesterday.
"What we're trying to do with this bill is simply put the small webcasters on life support until we can reform the [copyright arbitration panel] process," said Rep. Rick Boucher, Virginia Democrat.
Mr. Boucher is sponsoring the bill with Rep. Jay Inslee, Washington Democrat, and Rep. George Nethercutt, Washington Republican.
The Recording Industry Association of America opposes the legislation.
"This bill would create an industrywide exemption for webcasters that would let them deliver all the music they want without paying anything to creators," said John L. Simson, executive director of SoundExchange, which was set up by the recording industry to collect royalties. "Congress should not legislate that creators forgo their income so that webcasters can maintain business models that have not proven themselves able to succeed in the free market."
The bill proposed by the three lawmakers 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.
Webcasters and radio stations that make music available on Web sites have had to pay the royalty to record labels and artists since 1998, under the terms of the Digital Millennium Copyright Act. But there was no mechanism to figure out how much they had to pay until last month.
In his ruling June 20, Librarian of Congress James H. Billington, who has jurisdiction over copyright disputes, said webcasters must pay a royalty 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.
Webcasters and radio stations are scheduled to make a retroactive payment on Oct. 20 for copyrighted music played from 1998 through Sept. 1, 2002. That imminent payment has forced an estimated 50 webcasters to shut down. The new bill could prevent other webcasters from going silent, said Kevin Shively, director of Interactive media at Internet broadcaster Beethoven.com, in Hartford, Conn.
"Small webcasters see this legislation as a stay of execution. It allows us to stay in business and see the possibility of a more equitable royalty rate," Mr. Shively said.
Another copyright arbitration royalty panel will convene to determine rates for 2003 and 2004, but those hearings haven't been scheduled.
By the time they have to pay for copyrighted music and make retroactive payments for music played since 1998 webcasters hope they have had a chance to negotiate a lower royalty rate.
"Small webcasters have repeatedly said they are willing to pay a fair royalty, but they can't pay the crushing royalty that's been proposed and that will put them out of business," said David Oxenford, a Washington lawyer who represents a group of small webcasters.
Like webcasters, radio stations are disputing the new royalty rate. Thousands of radio stations use streaming technology, which lets them transmit songs to a Web site that are beamed over the airwaves and available on a radio.
Clear Channel Communications Inc., the nation's biggest radio station owner with 1,200 stations, and a handful of other companies filed an appeal earlier this month 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 to Web sites.
Webcasters, radio stations and the Recording Industry Association of America have until Aug. 8 to appeal Mr. Billington's decision.
Mr. Boucher said the House Judiciary Committee and House Small Business Committee are expected to schedule hearings on the bill when Congress returns in September from its recess.

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