Webcasters Hopeful as Feds Reconsider Fees

WASHINGTON --Webcasters have their fingers crossed after getting a temporary reprieve from a controversial royalty rate recommendation; and many of them are confident that the eventual decision, expected in late June, will enable them to stay in business after all.

"It's primarily a waiting game now," says Kurt Hanson, publisher of the Radio And Internet Newsletter (RAIN).

Thousands of Webcasters have been protesting a proposal by the Copyright Arbitration Royalty Panel (CARP) in February to charge Internet radio operators a royalty of 0.14 cent per song per listener. Independent Webcasters call the figure "outrageous" and claim it would force them to pay fees that in many cases exceed their revenue. The issue of performance and record-label royalty rates has been pending since the 1998 Digital Millennium Copyright Act, which first obligated Webcasters to pay royalties in exchange for automatic license to play whatever copyrighted music they wished.

Webcasters Optimistic

The Librarian of Congress has rejected the rates that CARP recommended, without giving a reason for Tuesday's decision. He now has until June 20 to make a final rate decision, this time based on the recommendation of Registrar of Copyrights Marybeth Peters. She and General Counsel David Carson will mull over more than 15,000 pages of testimony generated by CARP, but they won't schedule new hearings or take additional public comment.

Hanson of RAIN, who is also an independent Webcaster and the producer of the Save Internet Radio site, says he thinks the outcome is in good hands.

"The copyright office seems knowledgeable...fully informed and committed to the legislative intent of the DMCA," Hanson says. He was among the many members of the Web radio community who flocked to lobby Congress earlier in May to challenge CARP's recommended royalty rate.

That recommendation reflected the financial capability of large Webcasters like Yahoo and AOL, and CARP did not consider the devastating affect it might have on independent Webcasters, say representatives of the smaller organizations. Many said the proposed royalties would put them out of business.

"For all we know, [the copyright office] will take the recording industry's position and recommend a higher rate, but that seems extremely improbable...in fact, it's ridiculous," Hanson says. "They're going to set a rate that's fair and accomplishes what the DMCA set out to do."

Awaiting Decision

The Recording Industry Association of America, in a brief statement Tuesday, did not concede defeat, noting that no one knows why the Librarian rejected the CARP plan.

When the final ruling comes June 20, "anything is possible," said RIAA president Cary Sherman. The RIAA denies the Web radio community's charges that CARP was tilted in favor of the big record companies and biased against small Web radio stations.

Bob Ottaway of Classicalmusicdetroit.com says Webcasters' lobbying efforts will be crucial to the upcoming decision. The copyright office hadn't heard the Webcasters' view before, according to Ottaway, and now the Librarian of Congress can make a balanced decision. He says the independents now have greater confidence that they'll get a fair shake.