Web radio royalty-rate deadline passes but controversy plays on

by BILL VIRGIN, Seattle Post-Intelligencer

Internet radio hasn't gone silent yet. Neither has the debate over how much Internet stations should pay for the music they play.

Last weekend's deadline for higher royalty rates for songs played on the Internet came and went with a flurry of negotiations and legislative proposals before Congress, but no imposition of the higher rates.

Those higher rates would apply to both over-the-air (terrestrial) broadcasters who operate Internet versions of their stations, as well as those stations that operate solely on the Web; both say dramatically higher royalty rates will force some off the air.

So far, most Internet stations say they haven't altered their operations, while they wait for the negotiations to play out.

"It's really a day-by-day, week-by-week situation," says Tom Mara, executive director of KEXP-FM (90.3), which has a considerable online audience.

Complicating the debate is that there are splits and differing agendas on both sides of the fight.

On the music side, SoundExchange, the recording-industry organization that collects and distributes royalties, argues that musicians are entitled to greater compensation for their music; at least some in the music community agree, arguing that webcasting, far from financially struggling, is a profitable business.

Others in the music community say the higher royalty schedules will cut off access to listeners for many artists.

"Independent artists will truly suffer," says Dawud Raamah of Seattle-based Sum Moh Records, which operates an Internet radio station for its artists. "Artists are being tricked into believing that these higher royalty rates are for their benefit. However, higher rates will thin out the Internet radio scene, giving them less possible places to have their record played leading to less or no royalties."

On the broadcasting side, radio stations aren't happy about the size of the increase and new more complex reporting requirements. "We're not against paying royalties; we've been paying them for years," Mara says. "We were hoping there'd be a simple renewal."

Public and non-commercial stations argue they should get a break because of their role in giving exposure to artists not heard on commercial stations. Meanwhile, terrestrial broadcasters are facing another royalty battle, with artists and performers saying they too ought to get royalty payments (stations currently pay composers and publishers).

Some Internet broadcasters, meanwhile, suspect terrestrial and satellite broadcasters of trying to quash the growing competitive threat they pose.

"Many young people consider terrestrial radio boring and just a lot of commercials,' says John Lyman, operator of Jet City Radio. "Satellite radio is good, but you have to pay for it, and now they have commercials too. Internet radio offers literally thousands of different channels and a wide range of genres not available from the other two sources."

For the moment, the new royalty rate schedule has been placed on hold pending further talks among the various parties. Lyman credits the outcry raised by net broadcasters, listeners and some musicians for the postponement. Congress would probably prefer the principals to work out a settlement, he adds, but if they don't it may well step in and impose its own plan, such as the Internet Radio Equality Act co-sponsored by U.S. Rep. Jay Inslee, D-Wash.

article originally published at http://seattlepi.nwsource.com/printer2/index.asp?ploc=t&refer=http://seattlepi.n....

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