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Your favorite Web radio station could vanish within weeks, unless Congress stalls an order imposing royalty rates that exceed those for broadcast stations.

The House is expected to vote Tuesday on a rush bill to delay the new fees for six months--a move that cheers Webcasters, who have been all but resigned to closing up shop. October 20 is their current deadline to pay royalties to the music labels at .07 cents per song per listener--retroactive to when they began business.

While the fee may not seem like much, it exceeds the royalties that radio stations have paid songwriters and publishers for decades--the model that Webcasters prefer. Broadcast stations pay a fee of about $250 per year plus a small percentage of stations' gross revenues (usually between 3 and 5 percent). Webcasters say the royalty rate imposed on them will certainly put almost all of them out of business, because they don't make enough in subscriptions or advertising revenues to pay it.

For example, a Web-based station like 3WK Underground, launched in 1997, faces fees of $50,000 in outstanding royalties alone. The station earned just $10,000 last year, says Wanda Atkinson, general manager and co-owner of the alternative music station in St. Louis, Missouri.

Champions Wanted

The latest legal delay is led by GOP Representative James Sensenbrenner of Wisconsin, who chairs the House Judiciary Committee. House rules let a committee chair bring a vote on legislation directly to the House floor under what is called the suspension calendar. It will take a two-thirds vote for the bill to pass, but its supporters say that should not be a problem.

Many representatives want to find an equitable solution to the problem, according to a spokesperson for Rep. Jay Inslee, a Washington Democrat. Inslee and Rick Boucher of Virginia introduced a bill in July to change the royalty rules, but the measure didn't come up for debate and is considered dead with less than two weeks left before Congress adjourns on October 11 for midterm elections.

The next challenge is getting the same or similar legislation introduced and voted on in the Senate, which has its own set of rules. However, several observers expect that will occur, possibly under the auspices of Democratic Senator Patrick Leahy of Vermont. Leahy is a strong supporter of Internet radio, say some Webcasters, who have been lobbying Congress.

Webcasters aren't counting on a successful vote, however.

"We're going to send e-mail to every streaming station out there" to support the bill, says 3WK's Atkinson.

A delay "seems like a really good solution," says Kurt Hanson, publisher of the Radio and Internet Newsletter (RAIN) in Chicago, which tracks the Webcasting industry. The extra six months will give Congress time to act on new legislation that changes how royalties are calculated, and will also buy time for a court appeal of the Librarian of Congress' ruling.

Ongoing Battle

The shutoff threat heightened in June, when the Librarian of Congress declared the rate and set the October deadline.

Royalties have been under suspension--and discussion--since passage of the Digital Millennium Copyright Act in 1998. Among its controversial provisions is one imposing performance royalties specifically for the recording artists and music labels, which are represented by the Recording Industry Association of America, the music industry organization that forced Napster out of business.

But Hanson says that, on average, most artists receive only $4 a month in performance royalties, so the delay is not likely to be much of an imposition on recording artists.

The pending .07-cent performance royalty rate is actually a break from the initial fee of .14 cents per song per listener, set in May. The Librarian of Congress halved the fee in June, but Webcasters still cringed.

All of the affected parties--broadcasters, record labels, and "pure Webcasters"--are appealing the ruling through the courts.

A separate negotiation process is ongoing on for so-called satellite radio--digital broadcasts via radio waves, mostly to niche users' digital satellite car radios. In addition, National Public Radio stations and other affiliates of the Corporation for Public Broadcasting have a separate deal with the RIAA that covers them for two years, so few--if any--NPR stations are expected to close down their streaming Webcast operations as a result of the ruling.

Because of the importance of the issue, Atkinson and other Webcasters have spent a lot of time in Washington, D.C., lately, lobbying Congress for a solution to the standoff, as well as negotiating with the RIAA.

"We're getting closer to a deal [with the RIAA], but unless Congress keeps up the pressure" it could unravel, says 3WK's Atkinson. Meanwhile, she worries whether both the House and the Senate will act in time. "We're all on pins and needles right now," she says.

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