Music Industry, Schools Agree Webcasting Rate

By | June 3, 2003 at 12:00 AM

Universities and the music industry said on Tuesday they had reached a royalty payment deal that will allow college radio stations to stream music over the Internet at a discount.

The agreement marks the final settlement in a long string of negotiations to ensure that musicians and record labels get paid for performances on satellites, cable systems, the Internet and other new distribution channels.

Internet “Webcasters” and the music industry have struggled for years to set an appropriate royalty rate that would compensate musicians and record companies while not driving the fledgling online broadcasters into bankruptcy.

Under the deal, college radio stations and other educational broadcasters will pay a flat fee of $250 to stream their signals over the Internet this year, while other noncommercial Webcasters will pay up to $400. The deal applies retroactively to 1998 and lasts through the end of next year.

Fees are lower if the broadcast is limited to news or sports, while those transmitting more than one channel or reaching larger audiences would pay more.

The flat-fee structure echoes a deal reached last fall with smaller commercial Webcasters, who agreed to pay $500 per year rather than the standard commercial rate of roughly 1 cent per hour for each listener, which they feared would drive them out of business.

Noncommercial operators had until June 30 to reach a deal of their own before heading to arbitration, a costly and time-consuming process.

Officials on all sides praised the deal, saying it would provide revenue for musicians and labels while encouraging small Webcasters to play lesser-known music.

“We recognize that noncommercial Webcasters operate under different conditions than for-profit Webcasters,” said Steven Marks, a senior vice president at the Recording Industry Association of America, which represents large record labels.