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New law could save internet radio

Congress looks to overturn crushing royalty ruling

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A law has been proposed in the US Congress that would overturn a recent ruling on internet radio royalty payments. The bill could save internet radio, according to activists.

Earlier this month the Copyright Royalty Board (CRB), which reports to the Library of Congress, increased the charges which internet radio stations will have to pay in order to broadcast music. Stations claim that the charges in many cases represent more than their total revenues, and that they make it impossible to build a business out of online radio.

The CRB is answerable to Congress, and two members of the House of Representatives have proposed a law which would withdraw the CRB's recent ruling and propose a compromise system of payments.

Internet radio activists say that the system is unfair because it penalises online radio stations unduly. Broadcast radio pays no royalty fees, they say, while satellite radio pays far less than internet radio's new charges.

The new law will charge the same fee to radio stations whether they are provided via satellite, cable, or the internet. It will offer stations the chance to choose to pay 7.5 per cent of their revenues or 33 cents per hour per listener.

The bill was introduced by Democrat Jay Inslee and Republican Don Manzullo.

"Since the CRB's decision to dramatically and unfairly increase webcaster royalty rates, millions of internet radio listeners, webcasters and artists have called on Congress to take action," said Jake Ward of lobby group SaveNetRadio. "Today Congress took notice, and we thank Mr Inslee for leading the charge to save music diversity on the internet."

Speaking this month to OUT-LAW Radio's Joe Kennedy, chief executive of Pandora, one of the internet's largest radio-style services, said the threat to online radio was severe.

"The judges adopted the proposal to triple the rates for large webcasters, and for small webcasters it's actually closer to a 12 times increase in the rates that they pay," said Kennedy. "It's an extraordinary increase in the rates that will effectively kill internet radio as we know it today.

"Over 90 per cent of internet radio will simply be gone. The net result will be a huge loss of diversity, a huge loss for music artists and a loss of virtually all of the internet radio that exists."

"You can't put an economic chokehold on this emerging force of democracy," Inslee said, according to CNet News. "There has to be a business model that allows creative webcasters to thrive and the existing rule removes all the oxygen from this space."

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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