Ruling offers bone, bane to rivals

For decades, songsters and labels have bemoaned the fact that they receive no royalties from radio play. Sorry, say broadcasters — it’s free promotion.

But last week, a federal arbitration panel made history in setting a proposed royalty rate for songs broadcast over the Internet, creating a new multimillion-dollar revenue stream for artists and labels.

The rate set by the Copyright Arbitration Panel (CARP) fell somewhere between what broadcasters wanted and what labels and artists were pushing for.

The National Assn. of Broadcasters, along with Webcasters, argued that a high rate would stifle development of the Internet. (Broadcasters never wanted a royalty set at all; they say Internet play is no different from radio.)

“If the powerful record company interests’ goal was to strangle a fledgling new service to radio listeners, it may have succeeded beyond its own expectations,” says NAB prexy-CEO Eddie Fritts of the ruling.

For broadcasters simultaneously Webcasting on the Internet, the rate proposed is 0.07¢ per song. For songs played directly on the Internet, the rate would be 0.14¢ per song. The RIAA wanted just one rate, 0.4¢ per song. Broadcasters and Webcasters wanted 0.014¢ per sound recording.

“We would have preferred a higher rate,” says Recording Industry Assn. of America topper Hilary Rosen. “But in setting a rate that is about 10 times that proposed by the Webcasters, the panel clearly concluded that the Webcasters’ proposal was unreasonably low and not credible.”

CARP’s recommendation will be forwarded to the Librarian of Congress, which has ultimate say-so. Affected parties will now have a chance to comment. The country’s top librarian can either accept or reject CARP’s figure, but must do so by May 21.

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