By Robert MacMillan and David McGuire
washingtonpost.com Staff Writers Saturday, October 19, 2002; 3:46 PM
Small Web broadcasters won't pay the price for Congress's failure to
pass legislation that relieves them from thousands of dollars in back
payments to the recording industry, said the group that collects
performance royalties for copyright owners.
SoundExchange, which collects royalties for musicians, songwriters and
the corporations that own many music copyrights, said late Friday that
it would ask for webcasters to make $500 minimum payments after the
Senate adjourned without voting on a bill that would reduce the
royalty payments smaller webcasters owe back to 1998.
"Given the unfortunate fact that a lone senator apparently held up the
small webcasters' bill, we felt it appropriate to offer this
proposal," said SoundExchange Executive Director John Simson in a
written statement about the 11th-hour deal. "We hope that this
unexpected development will be soon resolved by the Senate."
Record companies on Sunday were expected to begin collecting four
years of back royalties from all Web radio stations under rates
established earlier this year by the U.S. Copyright Office, part of
the Library of Congress.
Sen. Jesse Helms (R-N.C.) kept the Senate from voting on the bill
before the Sunday deadline because of objections from religious
Internet radio stations in North Carolina, sources close to the
webcasting deal said.
"My immediate reaction is encouragement that they seem to really want
to find some remedy," said Kevin Shively, director of interactive
media
at Internet radio station Beethoven.com, a mid-sized classical music
webcasting service with 65,000 to 70,000 listeners. But Shively
withheld any endorsement of the SoundExchange offer, saying he is
still
analyzing its terms.
Many small Web radio station owners say their fate rests in the hands
of the recording industry after senators delayed further action on the
bill until after the mid-term elections.
Under the bill, negotiated by a coalition of small Webcasters and the
Recording Industry Association of America (RIAA), lower royalties
would be applied to webcasters with less than $1.25 million in annual
revenues. Webcasters above that level would be still be required to
pay royalties under the plan established by the Copyright Office,
under which Internet radio stations would pay a royalty rate of .07
cents per song, per listener.
Webcasters argued that the .07-cent figure was too high, while the
RIAA said it was too low. Negotiations then began after some members
of Congress said they would try to delay the royalty rate structure
for another six months unless a compromise was reached.
The legislation, which passed the House of Representatives earlier
this month, would require small webcasters to pay either 8 percent of
revenues or 5 percent of expenses to cover webcasts dating back to
1998, when the Digital Millennium Copyright Act that mandated the
royalty payments for Internet broadcasts became law.
The bill also would require webcasters to pay as much as 12 percent of
their revenues, or up to 7 percent of their expenses, for future
royalty payments. The actual rate varies based on the size of the
webcaster. Webcasters would pay into a fund that would be distributed
among copyright holders.
