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Web Royalties Topic of Debate on Capitol Hill

Indie labels and artists’ reps hit Capitol Hill Tuesday in an 11th-hour bid to push through a new royalty rate that Webcasters will have to pay for music streamed on the Internet.

Webcasters say the rate set by a special arbitration panel will put them out of business, and Wednesday morning will ask the Senate Judiciary Committee to intervene. The congressional hearing comes less than a week before Librarian of Congress James Billington is due to announce the official rate.

The label executives mounting Tuesday’s counteroffensive on Capitol Hill said the record biz is willing to live with the proposed rate, even though it’s not as high as they asked for.

“We’re not here to bellyache and whine,” RAS Records president Gary Himelfarb said. “We’re saying, ‘Let’s try it, let’s go.”‘

Himelfarb is a board member of SoundExchange, the entity set up to collect and distribute the new royalties.

Those making the Hill rounds with Himelfarb included SoundExchange heads John Simson and Barrie Kessler and National Academy of Recording Arts & Sciences executive director Daryl Friedman.

Webcasters want Billington to toss the proposed rate and come up with a lower figure.

Webcasters and the record industry have been at odds over the appropriate rate ever since the online royalty was established in 1998 under the Digital Millennium Copyright Act. The online startups scoffed at the labels’ early proposals, which they said were prohibitively high.

Last year, a Copyright Arbitration Royalty Panel was convened by the U.S. Copyright Office to hash out an appropriate per-play rate for music streaming. The CARP essentially split the difference between label and Webcaster proposals, setting a rate of 0.14 cents for online-only broadcasters, and 0.07 cents for radio stations that duplicate their broadcasts online.

Those testifying on behalf of the record biz at Wednesday’s hearing include Recording Industry Assn. of America chairman Hilary Rosen and recording artist Dan Navarro, who will represent the American Federation of Television & Radio Artists.

On the opposing side, Arbitron Webcasting Services Division chief Bill Rose will testify, as will Jonathan Potter of the Digital Media Assn.

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