Saving Internet radio: Congress passes Webcaster Settlement Act

by Tim Bajarin, PC Mag

Until this week, the fate of Internet radio was uncertain. An important bill sat before Congress: Called the Webcaster Settlement Act of 2008, it guarantees that if Internet radio stations and copyright holders can reach a deal over royalty rates, the government will not interfere.

I spoke via e-mail with Pandora founder Tim Westergren, who told me that Internet radio stations such as Pandora had been contesting a Copyright Royalty Board (CRB) decision from March 2007 that dramatically increased the royalties Internet radio stations were forced to pay. He pointed out that Pandora would, under the CRB rules, have to hand over $18 million of its expected $25 million 2008 revenue to cover royalty fees—a price that could force the company out of business.

To Tim's credit, he helped orchestrate a major e-mail and call-in campaign asking congressional representatives and senators to pass the Webcaster Settlement Act. Over the weekend, the House finally agreed and passed it. And on Tuesday, the Senate did too. This gives Pandora and other Internet radio stations time to cut better royalty deals so that artists can still make money and Internet radio can stay alive.

Beyond Westergren's campaign, others helped make this happen. NPR has many friends on the Hill, and the organization lobbied hard to get the bill passed. However, the National Association of Broadcasters (NAB) lobbied against it, saying that Web competitors could get a deal done instead with SoundExchange, the body that collects the royalties. The NAB objected to the fact that they had only until December 15 to complete their deal. The major U.S. representative behind this bill, Howard Berman (D–CA), agreed to extend the deadline to February 15, the same date allotted for Internet radio groups to work out their deals with SoundExchange. With that provision, the NAB dropped its challenge.

Now Pandora and the rest of the Internet radio companies can start negotiating. I'm hopeful for a win-win deal, whereby artists and Internet radio companies make it possible for the public to have access to great Internet radio for a long time. After all, it was thanks to satellite and Internet radio that I rediscovered a long-lost friend.

article originally published at http://www.pcmag.com/article2/0,2817,2331595,00.asp.

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