July 17, 2007 – 8:27 p.m.
Not long after a panel of copyright judges decided in March to hike music royalty fees for Internet radio stations, small webcasters began a lobbying blitz on Capitol Hill, saying their business model was in danger.
The campaign only recently paid dividends: The new fees technically went into effect July 15, but most webcasters are still playing songs — and still paying the older, much lower rates — in part because of efforts by Rep.
Markey brought webcasters and representatives of the music industry together in last-ditch talks late last week. Some progress was made in that closed-door meeting and, for now, the old fees are still in place. Negotiations are still ongoing.
Copyright issues are not under Markey’s jurisdiction as chairman of the Energy and Commerce Subcommittee on Telecommunications and the Internet. But Jessica Schafer, his spokeswoman, said Markey decided to host the Web radio negotiations because “he does have jurisdiction over the Internet, and he has a longstanding interest in the issue.”
If anything, Markey has spent much of the past year positioning himself as a key player on emerging technology issues. Schafer said Markey has not taken a side in the negotiations but rather is interested in helping the parties find their own solution.
Congress could choose to end the disagreement on its own:
The board, which is part of the Library of Congress, has full authority to set the fees paid by Internet stations as well as traditional broadcasters. Webcasters were paying 7/100 of a penny for every song streamed; under the new ruling, they would have to pay as much as 19/100 of a penny per song by 2010. Stations also would have to pay an annual $500 fee per music “channel.”
Most online stations say the fee increase, particularly combined with the per-channel fee, would cripple them financially.
Thousands of individuals and organizations that stream music over the Internet are affected by the new rates. They include colleges, Web radio hobbyists, nonprofit organizations such as National Public Radio and large companies such as Yahoo Inc. and AOL Time Warner Inc.
As a result of the meeting, SoundExchange, the nonprofit that collects royalty payments and distributes them to recording artists, has agreed to keep the old royalty rate in place as long as good-faith negotiations continue.
“There’s been tremendous progress,” said Richard Ades, a SoundExchange spokesman.
While webcasters have been granted what appears to be a temporary reprieve from the new rates, any decisions overseen by Markey would still have to be submitted to the Copyright Royalty Board for its review or be enacted by Congress.
SoundExchange plans to remand any final deals to the board for it to implement, Ades said. But many smaller webcasters want a new law in place so that they have more certainty about their legal responsibilities.
“That’s really a must for webcasters, because part of what webcasters do is they play music from tens of thousands of artists,” said Tim Westergren, founder of Pandora.com, one of the larger Internet radio services. “The only way you can do that is if you don’t have to sign individual deals with every rights-holder.”
Lawmakers seem to prefer that the parties find their own solution rather than seek a new law.
Christine Hanson, Inslee’s spokeswoman, said he prefers negotiating to legislating. “Simply because of the time involved, it just would be a lot faster,” Hanson said. “But for Jay, the number one thing is reaching an agreeable solution to both sides, where artists feel like they’re being compensated fairly and webcasters can have a sustainable economic model.”