- The Washington Times - Saturday, November 16, 2002

Congress approved a deal early yesterday that would help Internet radio stations avoid extinction by lowering the cost of copyrighted music.
The bill does not set a rate for music.
The legislation, brokered by retiring Sen. Jesse Helms, North Carolina Republican, and approved just before 3 a.m. yesterday, allows the recording industry to negotiate royalties with webcasters for music beamed over the Internet from 1998 through 2004.
Webcasters, the recording industry and unions representing artists praised the bill.
"I think everyone believes this is a positive development," said Kevin Shively, director of interactive media at classical music webcaster www.Beethoven.com, in Hartford, Conn.
Internet radio is an increasingly popular method of listening to music, especially at work, where people have access to high-speed connections. But the nascent webcasting industry makes little money because the companies have insignificant revenue from advertising.
Webcasters complained that rates established by the librarian of Congress in July would have put them out of business by making copyrighted music too expensive. Those rates replaced even higher royalties established by an arbitration panel.
Small webcasters including www.Beethoven.com negotiated a lower rate after the librarian of Congress' decision. That rate would have covered a small group of businesses. But Mr. Helms blocked the bill last month when a group of Christian radio stations said they didn't want a rate negotiated by small, commercial webcasters to influence negotiations with artists and record labels on royalties for music they play.
"Our concern was that future negotiations not be prejudiced by a separate set of rates," said Karl Gallant, a lobbyist for the National Religious Broadcasters Music License Committee, which represents 700 Christian radio stations.
Under that deal, shepherded through the House by Rep. F. James Sensenbrenner Jr., Wisconsin Republican, small webcasters would have paid royalties of 8 percent to 12 percent of revenue for music.
The new bill would nullify those terms.
"There were many parties that were concerned about legislating rates and terms," said Jonathan Potter, executive director of the Digital Media Association, a trade group that represents large webcasters.
Librarian of Congress James H. Billington's proposal would also be nullified. Webcasters would have paid roughly 70 cents for every song heard by 1,000 listeners under his proposal.
Now the Recording Industry Association of America will negotiate rates on behalf of artists and record labels for all music webcast over Internet radio.
Webcasters say they expect the RIAA to deal with them fairly in negotiations.
"I think the copyright holders would be playing a serious game of political Russian roulette if they don't negotiate in good faith," Mr. Shively said.
John Simson, executive director of SoundExchange, the group set up by the RIAA to collect and distribute royalties, said he expects to negotiate at least three rates: one for noncommercial stations, one for small commercial webcasters and one for large Internet radio stations.
The nation's estimated 1,300 college radio stations will push for a rate lower than the one proposed by Mr. Billington, who said the stations must pay a minimum of $500 a year.
That could bankrupt many college stations, which operate on minuscule budgets, said Will Robedee, vice chairman of Collegiate Broadcasters Inc. and general manager at Rice University's radio station, KTRU.
College stations will have until June to pay for copyrighted music played since October 1998.
Small webcasters expect the rates outlined in Mr. Sensenbrenner's bill to be adopted quickly.
Internet radio stations already pay composers and music publishers royalties. The 1998 Digital Millennium Copyright Act established that they must pay artists and labels, too.
The bill has been sent to President Bush, who is expected to sign it.


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