- The Washington Times - Friday, June 21, 2002

Librarian of Congress James H. Billington yesterday cut in half a proposed royalty rate that Internet radio stations must pay to play copyrighted music.
Internet radio stations, or webcasters, said the decision by Mr. Billington was a significant victory for the nascent industry.
But webcasters may press for even lower rates, saying the royalty may still be high enough to force many webcasters, who have little revenue, out of business.
Mr. Billington's decision can be challenged in federal appeals court.
"It's a step in the right direction, but I think we're going to fight this thing even more," said R.W. Shamy Jr., owner of Twangcast, an Orange, Va., Internet radio station.
In his ruling late yesterday afternoon, Mr. 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 last month.
The panel's proposal did not resemble recommendations floated by the recording industry or by webcasters. The recording industry initially suggested webcasters pay a fee equal to 15 percent of their annual revenue. Webcasters countered with a proposal to pay 5 percent of annual revenue, the same amount they pay composers and music publishers.
But the arbitration panel said webcasters must pay 0.0014 cents per song, per listener. The panel also ruled that standard radio stations that stream their radio signal to the Internet should pay 0.0007 cents per song, per listener.
In a written statement yesterday, Library of Congress spokeswoman Jill D. Brett said Mr. Billington lowered rates for webcasters because there was no reason to make them pay more than the radio stations streaming signals to the Web.
"The librarian has found that the [panels] decision to set a lower rate for retransmissions of radio programs than for Internet-only programs was arbitrary and not supported by the record of evidence," she wrote in the statement.
Mr. Billington's decision ends four years of uncertainty for webcasters, musicians and record labels. The 1998 Digital Millennium Copyright Act mandated that webcasters pay to play copyrighted music, but the lengthy dispute over royalty payments did not end until yesterday.
Royalties are to be shared equally among artists and record labels.
Despite Mr. Billington's decision to cut the royalty in half, it may still be too high for many webcasters, said David Landis, founder of Los Angeles webcaster Ultimate-80s.com and a leading figure in the movement to push for lower rates.
"Even with these rates, as small-business people, we're going to go away," Mr. Landis said.
The new royalty would cost Ultimate-80s.com $24,000 a year, he said.
Record labels were even more disappointed with the new royalty, which would amount to a subsidy for webcasters, they said.
"The rate, which cannot be squared with the decision of the arbitration panel, simply does not reflect the fair market value of the music as promised by the law. This decision will certainly reinforce the steadfast opposition of copyright owners to compulsory licensing," Cary Sherman, president of the Recording Industry Association of America, said in a statement.
Mr. Sherman did not say whether he would appeal Mr. Billington's decision.
BRS Media, a San Francisco electronic commerce consultant, said 4,600 standard radio stations were streaming their signals to the Internet as of April.
Web-only stations like Hober Thinking Radio in Takoma Park and Radio Del Ray in Alexandria are more numerous, but no accurate accounting of the industry's size is available. Live365.com, in Foster City, Calif., is a network of 47,000 webcasters. Thousands of others, like Hober co-founder Gregor Markowitz, operate Internet radio stations out of their homes.

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