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Will online broadcasters have to pony up?
New royalty rates could go into effect on Sunday

Music industry officials continue to clamp down on online music, and next week they may claim another victim: Internet radio.

Concluding a process begun in 2005 to create a new digital royalty structure, the federal government's Copyright Royalty Board published its finalized fee structure in March. The Digital Performance Right in Sound Recordings & Ephemeral Recordings legislation (PDF) caused an immediate chorus of dismay by Internet-only stations, broadcast radio simulcasting online and the millions of listeners of these services.

Unless Congress puts the legislation on hold, or a last-minute deal is brokered between the recording industry and webcasters, the new royalty rates will go into effect July 15. Royalties will be owed retroactively to Jan. 1, 2006, for both commercial and non-profit stations. They will be collected by Sound Exchange, Inc.

Under the previous fee system, royalties for digital transmissions were calculated on the basis of the station's revenue, or, in the case of non-commercial webcasters such as NPR, on a lump-sum basis. The new fee structure will calculate fees on a per-listener, per-hour basis, and also includes a minimum fee of $500 per station or channel. For services such as Pandora that create various streaming playlists for individual users, that minimum fee alone could multiply to astronomical levels.

Another point of contention is that royalties will be calculated both for specific recordings and for the songwriter. Currently, over-the-air radio stations pay only songwriting royalties.

A vocal campaign has formed to roll back the copyright board's decision. Part of that campaign is, which tells the public how to get involved and has links to news reports about the situation. A coalition of webcasters formed during the time the original negotiations were taking place has continued to fight the new rates both with appeals before the board and in the federal court system.

So far, action to stop the legislation has gained attention but little traction. The webcasting coalition's latest gambit, an appeal for an emergency stay filed in the U.S. Court of Appeals, District of Columbia Circuit, was denied late Wednesday. The groups involved in the coalition, representing an intriguing array of both huge and small interests, were listed in the board's final determination:

(i) Digital Media Association < > and certain of its member companies that participated in this proceeding, namely: America Online, Inc. ("AOL"), Yahoo!, Inc. (Yahoo!"), Microsoft, Inc. ("Microsoft"), and Live365, Inc. ("Live 365") (collectively referred to as "DiMA"); (ii) "Radio Broadcasters"(this designation was adopted by the parties): namely, Bonneville International Corp., Clear Channel Communications, Inc., National Religious Broadcasters Music License Committee ("NRBMLC"), Susquehanna Radio Corp.; (iii) SBR Creative Media, Inc. ("SBR") and the "Small Commercial Webcasters" (this designation was adopted by the parties): namely, AccuRadio, LLC, Digitally Imported, Inc., LLC, Discombobulated, LLC, 3WK, LLC, Radio Paradise, Inc.; (iv) National Public Radio, Inc. ("NPR"), Corporation for Public Broadcasting-Qualified Stations ("CPB"), National Religious Broadcasters Noncommercial Music License Committee ("NRBNMLC"), Collegiate Broadcasters, Inc. ("CBI"), Intercollegiate Broadcasting System, Inc., ("IBS"), and Harvard Radio Broadcasting, Inc. ("WHRB").

An earlier appeal filed directly with the copyright board to stay the decision was summarily denied in April. Also in April, legislation to roll back the new rates, the Internet Radio Equality Act, was introduced in the House by Reps. Jay Inslee (D-Washington) and Don Manzullo (R-Illinois), with a companion bill introduced to the Senate in May by Sen. Ron Wyden (D-Oregon).

While the House bill has attracted 127 co-sponsors (including Wisconsin Reps. Tammy Baldwin, Steve Kagen, Ron Kind and Gwen Moore), the Senate bill has attracted just four co-sponsors. Both bills are currently in committee.

Madison's listener-sponsored WORT-FM and UW's student radio station WSUM-FM both stream their broadcasts online. WORT music director Sybil Augustine is one of many who joined the letter-writing campaign to members of Congress. In her letter, she says the new royalty system will force many webcasters to simply close up shop and stop broadcasting on the Web as of July 15:

This is an extreme hardship for noncommercial, listener sponsored member run stations like the one that I volunteer for. We would likely have to stop webcasting and bringing the concerns of Madison to the world, as well as cut off this method of communication between our volunteers and their friends and family, who come from all over the world. This cuts back on cultural diversity and denies a voice to those underserved communities (such as Hmong, Mexican and African) who rely on us for a variety of music.

Neither WORT nor WSUM have announced how they'll respond on Sunday if the rates are allowed to take effect.

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