- The Washington Times - Wednesday, May 22, 2002

The Librarian of Congress has rejected a proposal to charge Internet radio stations for playing copyrighted music that many webcasters said would force them into bankruptcy and threaten the fledgling industry.
The decision gives webcasters a reprieve, but it fails to resolve their three-year dispute with artists and record labels that are demanding payment for use of their music.
Many webcasters considered the decision a victory despite the uncertain outcome pending a final decision next month. The 1998 Digital Millennium Copyright Act says they must pay to play copyrighted music.
"I would say this is positive," said Randal Allen, who owns and operates Radio Del Ray, an Internet radio station in Alexandria. "It has always been our belief that all players in the music business need to be compensated, but the egregious regulation would have forced us to change our business model or go out of business altogether."
Librarian of Congress James H. Billington gave no indication in his two-sentence order why he rejected the recommendation submitted to the U.S. Copyright Office by the copyright arbitration royalty panel Feb. 20. The proposal would have required webcasters to pay 0.0014 cents per song, per listener. Artists and record labels would have shared the money equally.
Mr. Billington is expected to modify the proposal by increasing or decreasing the copyright fee charged to webcasters when he issues his ruling by June 20. Any decision he makes can be challenged in federal appeals court.
"The librarian has rejected the arbitration panel's determination, but we do not know why or what decision the librarian will ultimately make based on the evidence presented. Since both sides appealed the panel's determination, anything is possible," Recording Industry Association of America President Cary Sherman said in a statement.
The recording industry initially suggested webcasters pay a fee equal to 15 percent of their annual revenue. Webcasters proposed paying 5 percent of revenue, the same amount they pay composers and music publishers.
"Some payment is justified. The question is whether it will be fair, and at the end of the process, only a fair payment that will enable webcasters to continue operating and to make a profit is justified," said Rep. Rick Boucher, Virginia Democrat, who asked Mr. Billington to reject the arbitration panel's proposal.
The copyright dispute has generated so much evidence that people on both sides said they expect federal officials to take more time to sift through the 135-page report of the copyright arbitration panel.
"Given the complexity of the issues, I am not surprised by the librarian's decision," said John L. Simson, executive director of SoundExchange, a group set up by the Recording Industry Association of America to collect and distribute royalties.
But the decision revoking the per song-per listener proposal should not be perceived as a victory, said a lobbyist for webcasters.
"There is no victory for anyone here," said Jonathan Potter, executive director of the Digital Media Association.
Gregor Markowitz, co-founder of Takoma Park webcaster Hober Smarthinking Radio, said prolonging the three-year debate over royalties makes it harder to run his Internet radio station.
Potential investors are waiting for the federal government to make a decision on royalties before they commit any money, Mr. Markowitz said.
Without investors, Hober must survive on modest advertising sales.
Few of the estimated thousands of webcasters are profitable because Internet radio attracts a small audience compared with standard radio and they can't charge much for advertising, Bill Rose, vice president of the Internet research firm Arbitron Webcast Services, said at a Senate hearing last week.
Charging too much now for royalties will crush the young industry, he said.
But webcasters must pay for music, just as they pay for rent, computers and other business expenses, Mr. Simson said.


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