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Napster needs its blanket

Asks Congress for compulsory license to cover copyrighted songs 11/01/2008 08:00:00 PM Eastern

Beleaguered Internet music-service Napster has officially asked Congress to grant it a blanket copyright license to offer music to consumers by paying one fee into a pool. That was Napster CEO Hank Barry's message to a Senate panel at a hearing last week.

Senate Judiciary Committee Chairman Orrin Hatch (R-Utah) called the granting of a "compulsory license" a "last resort," to be considered only if the industries involved could not work out their differences.

Napster has been trying to settle a legal dispute with record companies, which have accused the Internet service of violating their copyrights. Napster offers a file-swapping service on the Web that allows users to share pieces of music without paying for them. The Ninth Circuit Court of Appeals in San Francisco last month ruled that Napster was guilty of "vicarious" copyright infringement and ordered the service to take down any songs record companies identify as copyrighted within 72 hours of being asked.

Last July, before any court had ruled, Napster told Hatch's committee that it did not need any legislative intervention. But now that Napster has been soundly beaten in the preliminary rounds and the record companies have rejected its offer of $1 billion in licensing fees over five years, Napster is looking for help anywhere it can get it. Cutting individual licensing deals with record companies would be virtually impossible and extremely expensive.

But the content industries—represented at last week's hearing by MPAA's Jack Valenti and RIAA's Hilary Rosen—are opposed to any compulsory licensing scheme for music or movies.

"The reason a compulsory license won't work with movies," Valenti said, "is because cable and satellite are defined by limited areas. But the Internet is global and instant. The technology to contain it doesn't work."

Valenti also said the Internet's global nature would require an exorbitant royalty fee from would-be distributors, such as Napster.

"Americans would be subsidizing the viewers in other countries around the world," Valenti said. "There has never been a compulsory license that goes to the core distribution right," said RIAA's Rosen. "That would be a disaster."

Meanwhile, singers/songwriters Don Henley and Alanis Morissette came to Capitol Hill to defend artists' rights. Henley said artists should be compensated every time one of their works is streamed on Net radio.

"It is fundamentally unfair that broadcasters have always been exempt from paying performers a performance right for analog broadcasting; we don't want to see this inequity extended to the Internet," he said.

Broadcasters currently are challenging a ruling by the U.S. Copyright Office last December that requires them to pay royalties to record companies if they stream their radio signal over the Internet, a royalty they don't have to pay to broadcast over the radio.

"There are a number of examples of stations which, as a result of the Copyright Office's decision, have shut down their Internet streaming operations," said Dennis Wharton, NAB spokesman.

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