Vote on Webcaster Royalties Dropped

WASHINGTON -- In an unexpected move, the House of Representatives canceled a vote Tuesday on whether to give Internet radio stations an extra six months before they're forced to pay royalties to artists.

Instead, Webcasters and recording industry officials say they'll find a solution on their own.

House Judiciary Committee Chairman Rep. F. James Sensenbrenner (R-Wisconsin)--the bill's sponsor--decided not to put the legislation to a vote after meeting with officials on both sides. The two groups have been negotiating around the clock, and Sensenbrenner says he's confident they'll strike a deal by Friday.

In a statement, Sensenbrenner said such an agreement would be fair to all concerned, and would "provide the economic certainty and stability necessary for Webcasters large and small to succeed."

Under the current royalty plan, most Webcasters say they'll be forced out of business if they have to pay artist fees they say are higher than those paid by traditional radio stations.

Fighting for Survival

In June, the Librarian of Congress decided that Webcasters would have to pay 0.07 cents per song per listener, starting Oct. 20. The House bill would delay the imposition of those fees until April 20.

The reprieve would give Webcasters time to appeal the Librarian of Congress ruling, and would also give Congress time to examine how royalties are determined. Broadcast radio stations usually pay a royalty fee of about $250 per year, plus 3 to 5 percent of the stations' gross revenues.

Webcasters say the 0.07-cent rate is too high and would force many of them out of business. They too want a rate based on the percentage of their revenue, says Paul Maloney, editor of the Radio and Internet Newsletter (RAIN) in Chicago.

The debate began with the Digital Millennium Copyright Act of 1998. Since then, royalties have been an ongoing battle.

"We would like to see the Webcasters survive," says Richard Diamond, a spokesman for House Majority Leader Dick Armey (R-Texas). "If that can happen with a private sector deal, then that's great. Otherwise we'll move forward if we need to."

Closing the Deal

Both sides say they expect to work out the issue on their own.

"Maybe this sort of eleventh-hour negotiation tactic will be something that will work," says RAIN's Maloney.

The Recording Industry Association of America would also prefer to see the dispute resolved by an agreement, according to a spokesperson.

"We've been trying to close a deal with the Webcasters for months, and this is a great opportunity to find common ground," the spokesperson says. "We are encouraged by the prospects of reaching a resolution."

Maloney says that while Webcasters fight to stay in business, he is "cautiously optimistic that the copyright holders will see that a vibrant Webcasting industry will be good for them in the long run."

Sensenbrenner says assuming the two sides reach an agreement at the end of the week, the House will pass legislation to codify the deal.