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US politicians back Act to save internet radio

Allows negotiations until 2009

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A law that could save internet radio stations from having to make payouts they claim will cripple them has been approved by the US House of Representatives and is expected to pass into law.

Internet radio stations had mounted a public campaign, claiming that new fees for playing music online set by the Copyright Royalty Board (CRB) would put them out of business. The measures approved by the House of Representatives will allow online radio companies to conduct their own negotiations with rights holders over what fees to pay.

To become law the Webcaster Settlement Act would need to be passed by the Senate and signed by the US president. Observers do not expect any major obstacles to be put in its way.

“This bill favors all webcasters and simulcasters – large and small," said John Simson, executive director of SoundExchange, the body that collects the royalties. "It paves the way for SoundExchange to use the coming months to pursue helpful solutions that allow all services to focus on business development."

The Act gives companies until February 2009 to negotiate with SoundExchange over what royalties should be paid to the rights holders which SoundExchange represents. Any agreement reached privately would have to be approved by Congress.

The CRB, which reports to the US Library of Congress, changed the fees paid by internet broadcasters last year. They had been paying 0.08 cents per song played but that was scheduled to rise in increments to 0.19 cents per song by 2010.

Internet radio company Pandora had led the public campaign against the fees. Founder Tim Westergren had said that the new royalties would put his company out of business.

"We're approaching a pull-the-plug kind of decision," Westergren told the Washington Post earlier this year. "This is like a last stand for webcasting.”

Pandora had asked listeners to telephone politicians to convince them to back the Act in a move that was widely seen as effective. It had been predicted that the vote would be close but the Act was passed unanimously by acclaim.

US press reports said that traditional radio trade body the National Association of Broadcasters (NAB) had opposed the Act. Westergren said in a statement, though, that the direct action of Pandora users had trumped industry lobbying.

"Thanks to your incredible support we were able to overcome the NAB's efforts to derail us. Phone calls rained into the congressional offices over the past 36 hours. Just amazing," Westergren said on Pandora's website.

In his request for users to phone their representatives, Westergren had said that "only massive grassroots opposition will keep us from another 50 years of top 40 radio. It's time to take a stand and break the stranglehold of broadcast media on radio".

Copyright © 2008, OUT-LAW.com

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

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