By David McGuire
washingtonpost.com Staff Writer Thursday, December 5, 2002; 11:55 AM
President Bush Wednesday approved a reprieve for a clutch of Internet radio stations facing extinction under government-mandated music royalty rates.
The legislation that Bush signed is designed to resolve a longstanding dispute over how much money Internet radio stations should pay for the privilege of "webcasting" copyrighted music. Congress approved the legislation last month.
The legislation does not establish specific royalty rates for webcasters. Instead, it authorizes the music industry's principal royalty collector, SoundExchange, to negotiate binding royalty contracts with small webcasters on behalf of all artists and record
labels.
Without the bill, webcasters would have been required to pay royalties under a plan established by the Library of Congress. In June, Librarian of Congress James Billington ruled that Internet radio stations should pay a royalty rate of .07 cents per-song, per-listener. Regardless of their size and financial resources, webcasters would have been required to pay those rates retroactively to the 1998 passage of the Digital
Millennium Copyright Act.
When a coalition of small webcasters complained that the retroactive royalty rates could drive them out of business, Congress stepped in to
broker a compromise between those companies and the recording industry.
Out of those negotiations came a bill that would have allowed small webcasters to pay a fixed percentage of either their revenues or their expenses in lieu of the per-song rate.
The webcasting legislation, a compromise sponsored by Sens. Patrick Leahy (D-Vt.) and Jesse Helms, (R-N.C.), also includes a six-month stay of royalty payments for noncommercial webcasters. Helms blocked the original bill out of concern that it could have harmed some religious broadcasters, according to sources close to the situation.
