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Web Broadcast Royalty Plan Rejected

The Librarian of Congress has rejected proposed royalty rates that would have charged Internet broadcasters based on each Web user that listens in.

Librarian James H. Billington will issue a final decision setting the new rates by June 20, the U.S. Copyright Office said Tuesday.

The Copyright Office ruled in December 2000 that organizations distributing music and other radio content over the Internet must pay additional fees to record companies that hold song copyrights.

In February, an arbitration panel proposed rates based on each person who is receiving a broadcast sent online. The rates ranged from.07 of a penny per song for a radio broadcast to.14 of a penny for all other copyrighted audio sent on the Internet.

For example, if 1,000 people use their computers to listen to a song broadcast by a radio station online, the broadcaster would have to pay for the song and for each of those listeners, or 70 cents. If those people listen to two songs, the fee would be $1.40.

Record companies do not receive fees for songs played only on radio broadcasts.

The recording industry had wanted higher rates, while companies that deliver music and video online had sought lower ones. The proposed rates would have cost larger webcasters hundreds of thousands of dollars annually.

Jonathan Potter, executive director of the Digital Media Association, which represents webcasters, said Billington’s rejection of the proposed rates “offers hope that the final royalty will be more in line with marketplace economics.”

The record industry viewed the decision with more uncertainty.

“Since both sides appealed the panel’s determination anything is possible,” said Cary Sherman, president of the Recording Industry Association of America. He said he does not know what decision Billington will make, but he looks forward “to the day when artists and labels finally get paid for the use of their music.”

Earlier this month, hundreds of Internet broadcasters joined in a “Day of Silence” to protest the proposed royalties that many of them said would put their small operations out of business and deal a blow to musical diversity online in favor of a few large outlets playing the same roster of Top 40 hits.

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