House Approves Web Radio Royalty Deal

By | October 8, 2002 at 12:00 AM

The House of Representatives on Monday approved a royalty-payment deal between the music industry and small Internet broadcasters after a last-minute change won the support of musicians.

By a voice vote, the House approved a deal that would allow smaller “Webcasters” to pay a percentage of revenues or expenses to the musicians and record labels whose songs they use, rather than a flat per-song rate set by the Library of Congress in June.

Smaller Webcasters had protested that the flat rate of.07 cents per listener per song could drive many of them out of business, because their royalty bills would exceed revenues from advertising or other sources.

After a week of round-the-clock negotiations, the two sides hammered out an agreement on Sunday.

But musicians objected because it did not guarantee that they would be paid directly, and Michigan Democrat John Conyers urged his colleagues to reject the deal shortly before it was called up for debate.

Judiciary Committee Chairman James Senenbrenner, a Wisconsin Republican, changed the bill to guarantee direct payment, winning the praise of Democrats who had opposed the bill.

“The chairman had a method to his ham-handedness,” said California Democratic Rep. Howard Berman.

Webcasters and the music industry must now take their deal to the Senate, where Judiciary Committee Chairman Patrick Leahy offered his support.

“Time is short in this congressional session, but I believe that final action on this solution is possible,” the Vermont Democrat said in a statement.

Under the terms of the deal, small Webcasters would pay 8 percent of their revenues for broadcasts between 1998 and the end of 2002, increasing to 10 percent over the next two years, or 12 percent if the station’s revenues exceeded $250,000.

Alternatively, Webcasters would pay 5 percent of their expenses for the 1998-2002 period and 7 percent over the next two years, if that amount was greater.

The deal only applies to Webcasters who will have taken in less than $1 million in total from 1998 until the end of this year. The revenue cap increases to $500,000 in 2003 and $1.25 million in 2004.

Larger Webcasters, such as America Online and Clear Channel Communications were not included in the agreement and will pay the previously set rate starting on October 20.

Trade groups for the recording industry and small Webcasters said they were pleased with the outcome.

“We both want fans to have the best musical experience possible, and this legislation helps us move forward together toward that goal,” said the Recording Industry Association of America and the Voice of the Webcasters in a joint statement.

A lobbyist for a musicians’ union said the frantic, last-minute negotiations had paid off.

“It was really a win-win-win-win,” said Ann Chaitovitz, national director of sound recordings for the American Federation of Television and Radio Artists.

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