Web music keeps streaming--for now

After a week of nonstop negotiations, Webcasters and the recording industry have struck a deal designed to keep small Internet radio stations in business.

The compromise permits significant discounts in the royalties that small commercial Webcasters must pay to music companies. The largest online stations will pay the rate originally imposed in June by the Librarian of Congress, which said Webcasters would have to pay .07 cents per song per listener, starting October 20--retroactive to when they went online. Webcasters said the rate is too high and would force them out of business.

The new rates were approved by the U.S. House of Representatives on Monday. The bill goes next to the Senate for approval, where another lawmaker expects to usher the measure through before Congress adjourns.

In Harmony

"The act embodies compromises for everyone involved," said the Recording Industry Association of America and the Voice of The Webcasters in a joint statement. "We appreciate the assistance of congressional leaders in helping move this process along. We look forward to building business partnerships that create the best possible music experience for fans."

This measure may buy small Webcasters some time to build their business, says Paul Maloney, editor of Radio And Internet Newsletter.

"I think a lot of the smaller Webcasters are not happy with the details, but it will prevent them from going bankrupt," Maloney says.

The initial proposed fees often exceeded revenues of small Web-based stations. For example, St. Louis-based 3WK Underground, launched in 1997, faced back royalties of US$50,000, although it earned only $10,000 last year.

The compromise "certainly is a rate that we can live with," says Jim Atkinson, 3WK co-owner.

The agreement is good news, agrees John Simson, executive director of SoundExchange, an organization comprising recording companies and artist representatives.

"For four long years, artists and record labels have awaited compensation for the music that Webcasters have used as the foundation for their business," says Simson. "This bill brings a measure of long-awaited certainty to a developing marketplace."

Legislative Champions

At first, several congressional representatives tried to push back the deadline for royalties, to give Webcasters time to appeal the ruling and give Congress time to examine the decision.

Representative F. James Sensenbrenner (R-Wisconsin), House Judiciary Committee chairman, delayed a vote last week to give both parties an opportunity for compromise. Recording industry representatives and the Webcasters on Sunday reached an agreement, which was entered into the bill before the House Judiciary Committee. It was passed by a voice vote Monday.

Patrick Leahy (D-Vermont), Senate Judiciary Committee chairman, says he will support Senate action on the bill when it arrives from the House.

"Time is short in this congressional session, but I believe that final action on this solution is possible," Leahy says.

Sliding Scale

The agreement is based on a sliding scale. Webcasters making less than $250,000 per year would pay 8 percent of revenue for 1998 to 2002.

For 2003 through 2004, Webcasters who make less than $250,000 would pay 10 percent of revenue or 7 percent of expenses, whichever is greater.

Webcasters making between $250,000 and $500,000 would pay the larger of 12 percent of revenue or 7 percent of expenses.

The minimum payment must be $2000, and it may be paid in three installments. The Webcasters and the recording industry will have to return to the negotiating table to determine rates for 2004.

Larger Webcasters making more than $500,000 would fall under the original Library of Congress assessment.

Sensenbrenner's bill does not address noncommercial Webcasters and broadcasters streaming on the Web. Those issues will be resolved in court.

"I would hope that next week will go smoothly, and we finally get back to running our business rather than working on the copyright issue," says Webcaster Atkinson. "As soon as it's all over I'll be relieved."

Michelle Madigan writes for the Medill News Service.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michelle Madigan

PC World
Show Comments



Sansai 6-Outlet Power Board + 4-Port USB Charging Station

Learn more >



Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?