- The Washington Times - Thursday, May 2, 2002

R.W. Shamy Jr.'s Internet radio station in rural Virginia has beamed country music since 1998 to people who log on to his Web site.

Yesterday, he played nothing. Mr. Shamy and hundreds of Internet radio stations nationwide silenced their broadcasts to protest a proposed copyright fee on music they play.

"We want to bring to the attention of consumers, the recording industry and the [U.S. Patent and Trademark Office] that we aren't going to take this," said Mr. Shamy, the program director at TwangCast, in Orange, Va.

"I've already gotten a hundred e-mails asking why went down," he said early yesterday.

Webcasters are slowly building momentum within their industry and among listeners in an increasingly high-profile fight to change a recommendation by the Copyright Arbitration Royalty Panel. Only about 9 percent of Americans listen to an Internet radio station during a given week, according to a report by media research firm Arbitron. But devoted fans of the nascent industry turn to Web radio for music they can't hear on mainstream radio.

The arbitration panel ruled in February that webcasters, who already pay composers and music publishers royalties, must pay record companies and artists to play copyrighted music. Webcasters must pay 0.0014 cents per song per listener, the panel said. Traditional radio stations that stream signals to Web sites would pay half that rate.

Webcasters have said the copyright fee will put some stations out of business because it is so high, and they have endorsed a plan to pay a fee based on a percentage of annual revenue. Mr. Shamy estimates the royalty rate proposed by the arbitration panel will cost TwangCast up to $100,000 annually.

The Recording Industry Association of America has argued the arbitration panel's proposal is too low.

John Simson, executive director of SoundExchange, a group set up to collect and distribute royalties that would be collected from Internet radio stations, said webcasters aren't the only people in jeopardy of being silenced.

"If those who make the music we all love are not fairly compensated for their work, that will be the result silence," Mr. Simson wrote in a statement yesterday.

Librarian of Congress James H. Billington will issue a ruling in the dispute by May 21.

Until then, webcasters are trying to rally support. They have had some success.

The Digital Music Association, a technology trade group lobbying on behalf of webcasters, said Internet radio stations and their listeners were flooding Congress with 1,000 faxes an hour yesterday afternoon, urging lawmakers to pressure Mr. Billington to change the Copyright Arbitration Royalty Panel's proposal.

Webcasters have gotten lawmakers' attention.

The Senate Judiciary Committee has scheduled a hearing May 15 days before the deadline for Mr. Billington's decision on the plight of the webcasters and the arbitration process to determine royalty rates. No witnesses have been selected to testify at the hearing yet.

A hearing is tentatively scheduled for June 13 by the House Judiciary Committee's subcommittee on courts, the Internet and intellectual property to examine the structure and effectiveness of the Copyright Arbitration Royalty Panel. Rep. Jay Inslee, Washington Democrat, sent a letter last week to Mr. Billington signed by 19 other lawmakers asking him to lower the fees because those recommended by the panel are "contrary to Congress' general policy not to stifle innovation on the Internet."

Jessica Litman, Wayne State University law professor and a copyright and Internet law specialist, said webcasters have reason to fume.

"The arbitration process wasn't designed to gain input from all the interested parties, and since the process was skewed, the result was skewed," she said. "The [copyright arbitration] panel didn't hear from a lot of small webcasters. They came up with a plan that makes sense for some big webcasters, but makes no sense for the smaller ones and the hobbyists. They simply won't have the money to make these payments."


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