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Fees set, fight certain

Broadcasters get no relief on streaming levy; decision irks Webcasters, record industry, too 6/23/2002 08:00:00 PM Eastern

The Librarian of Congress gave radio broadcasters no relief last week, leaving unchanged the royalty fees they must pay record companies for streaming their signals over the Internet. Pure-play Webcasters, by contrast, had their fees cut in half. Still, nobody seemed pleased with the decision; broadcasters said it spells doom for streaming.

After rejecting the recommendation of a panel of arbitration judges last February, Librarian James Billington was required to set up his own fees last week. Radio broadcasters and Internet-only Webcasters warned for four months that leaving the rate as-is would likely kill the Webcasting business, but Billington ruled that radio broadcasters must pay 0.07 cents per song per listener when simultaneously streaming their radio signal online.

"The Librarian's decision places a prohibitive financial burden on radio-station streaming and will likely result in the termination of this fledgling service to listeners," said Eddie Fritts, president of the National Association of Broadcasters.

Even before the Librarian's decision, the NAB Radio Board had decided to challenge the rule, written by the U.S. Copyright Office, that requires radio broadcasters to pay record companies royalties to stream copyrighted music.

Billington did reduce by 0.2% the fees broadcasters pay for what is known as an "ephemeral license," bringing the fee down to 8.8% from 9%. That license covers the automatic copies computers and other digital devices make of streamed material.

Pure Webcasters—Internet-only music services—fared better, seeing their fees halved to 0.07 cents per song per listener, from 0.14 cents.

Still, Webcasters weren't happy, calling any fee a tax they'll pay to transmit a song, said RealNetworks VP Alex Alben. Those fees, some say, exceed Webcasters' revenues.

Many parties are pursuing a legislative fix for the problem. Sen. Patrick Leahy (D-Vt.), and Rep. Howard Coble (R-N.C.), have indicated interest in reducing the rate. And, in April, House Judiciary Committee Chairman James Sensenbrenner (R-Wis.) collected comments to help write a new bill on digital copyrights.

The Recording Industry Association of America, whose record-company members will receive less money from Webcasters as a result of the ruling, blasted it: "The import of this decision," said President Cary Sherman, "is that artists and record labels will subsidize the Webcasting businesses of multibillion-dollar companies like Yahoo, AOL, RealNetworks and Viacom."

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