Panel proposes Net music royalty rates

A U.S. government panel charged with helping set royalty rates that Web broadcasters will have to pay for streaming music over the Internet delivered its recommendations Wednesday, handing down numbers that left both the recording industry and the Web broadcasters equally dissatisfied.

After months of debate and testimony, the Copyright Arbitration Royalty Panel (CARP) recommended that Web broadcasters pay a per-song, per-performance royalty rate of US.07 of a penny for radio broadcasts and .14 of a penny for all other copyright audio broadcast over the Internet. Additionally, the rates are retroactive, spanning back to 1998 when the Digital Millennium Copyright Act was passed.

Up until now, Web broadcasters have been operating with an unknown liability on their books. Still, the rates put forth by the CARP are not final. After further comment and recommendations, the rates are due to be approved by government lawyers and the Librarian of Congress.

Although both sides said the recommendations fell short of the rates they sought, each claimed partial victory.

"We are pleased that (the CARP's) recommendation is much closer to the royalty rate proposed by the Webcast industry than was proposed by the recording industry," said Jonathan Potter, executive director of the Digital Media Association (DiMA), which represents a number of Web broadcasters. "We are extremely disappointed, however, that the Panel's proposed rate is not significantly lower, as a lower rate would more accurately reflect the marketplace for music performance rights and the uncertain business environment of the Webcast industry."

Hilary Rosen, president of the Recording Industry Association of America (RIAA), took a different tack, however.

"We would have preferred a higher rate. But in setting a rate that is about 10 times that proposed by the Webcasters, the panel clearly concluded that the Webcasters' proposal was unreasonably low and not credible," she said in a statement.

Both sides said that they would continue to lobby with the U.S. Copyright office until the rates are set.

If Web broadcasters find that the royalty rates are too high, more sites might turn to subscription services or even decide to pack up their records and go home.

A summary of the CARP decision can be found on the Website of the U.S. Copyright Office at http://www.loc.gov/copyright/.

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