Deal Imminent on Web Radio Royalties

Byline: David McGuire

The House of Representatives today canceled a vote on an Internet radio bill after webcasters and recording industry officials said they are nearing a compromise in their long-running battle over music royalties.

The House was scheduled to consider legislation that would prevent Internet radio royalty rates established by the Library of Congress from taking effect until July 2003, instead of October of this year.

"Congress never intended to put webcasters out of business," said Richard Diamond, a spokesman for House Majority Leader Richard Armey, referring to the Digital Millennium Copyright Act of 1998, which opened the door to the Net radio royalty debate.

Diamond said that House leaders delayed action on the bill after House Judiciary Committee Chairman James Sensenbrenner (R-Wis.) hinted that an industry-led compromise was imminent. Sensenbrenner introduced the bill last week to postpone the rate structure established by Librarian of Congress James Billington's ruling last June.

"The parties involved have assured me they will reach a comprehensive agreement by Friday that will be fair to webcasters, record companies and recording artists, as well as provide the economic certainty and stability necessary for webcasters large and small to succeed," Sensenbrenner said in a prepared statement.

Sensenbrenner also said that the House likely will consider a bill that formalizes whatever arrangement the parties decide on.

In June, Billington ruled that Internet radio stations should pay a royalty rate of .07 cents per song, per listener, to the owners of the music they stream over the Web. Although lower by half than the .14-cent per-song rate set earlier by an arbitration panel, webcasters said that the .07 cent figure would run them out of business.

Recording industry officials complained the rate was too low.

Billington's ruling also would have required webcasters to pay royalties going back several years, which many Internet radio also said would scuttle their businesses.

Both sides expressed optimism about the ongoing negotiations, but neither would discuss specifics of a possible compromise.

"We're very happy for the opportunity to solve this dilemma before us," Dan Horowitz, federal affairs director for the Digital Media Association (DiMA) said. "We hope to see a speedy resolution to these issues." DiMA represents large and mid-sized Internet broadcasters.

"We've been trying to close a deal with the webcasters for months and this is a great opportunity to find common ground," the RIAA said in prepared remarks. "We are encouraged by the prospects of reaching a resolution."

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