- The Washington Times - Saturday, October 19, 2002

A key senator who blocked a bill late Thursday to lower royalties for small Internet radio stations will push for a broader measure to lower rates even further.

An aide to Sen. Jesse Helms, North Carolina Republican, said yesterday the senator supports legislation that lowers royalties on copyrighted music that webcasters must pay artists and record labels. He blocked a bill that would cut royalties for a group of small webcasters.

Retroactive payments for music played since October 1998 are due tomorrow, but Mr. Helms plans to ask the Recording Industry Association of America not to force webcasters to submit payment until a lower rate is negotiated.

"Just because they can collect royalties doesn't mean they have to," said Joe Lanier, legislative director for Mr. Helms.

The recording industry didn't waive payments, but it said yesterday small webcasters can make minimum payments of $500 for each year they have played copyrighted music since 1998.

"Given the unfortunate fact that a lone senator apparently held up the small webcasters' bill, we felt it appropriate to offer this proposal. We hope that this unexpected development will be soon resolved by the Senate," said John Simson, executive director of SoundExchange, the group set up by the recording industry to collect and distribute royalties.

The 1998 Digital Millennium Copyright Act requires webcasters to pay for copyrighted music. A group of webcasters and the recording industry have negotiated since March to come up with a mutually agreeable royalty, and on Oct. 7 the House approved their plan.

But Mr. Helms placed a last-minute hold on the bill after small webcasters in North Carolina expressed concern they were left out of negotiations.

Talks on a new rate must open the process to more small webcasters and lower royalties further, Mr. Lanier said. It is not clear whether Mr. Helms will attempt to draft lower royalties to cover all webcasters.

Under the 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 played from 1998 through 2004.

The agreement covered webcasters with as much as $1.25 million in revenue in 2004.

But that's a small group because it includes just those who initially approached the recording industry in March.

"We began this negotiation as a private deal. It morphed into [the bill shepherded by Mr. Sensenbrenner]. Had we had more clout and more experience, it might have looked different than it does," said Mike Roe, who runs www.radioIO.com, in Jacksonville, Fla.

Many small webcasters applauded the deal as a vast improvement over the formula thrust on them by Librarian of Congress James H. Billington, who said in June that Internet radio stations must pay 0.007 cent per song, per listener 70 cents for every song heard by 1,000 listeners.

After that decision, small webcasters lobbied for a lower royalty, arguing that the librarian's rate would bankrupt Internet radio stations, most of which have little revenue, and jeopardize the future of the new medium.

The recording industry said Mr. Billington's mandated rate was too low, but the association negotiated a deal for the vocal group of small webcasters nonetheless.

But what they owe may change again, if Mr. Helms can rally support for new legislation.

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