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Royalty rate pact OK’d

RIAA, Webcasters reach agreement

NEW YORK — SoundExchange, the royalty clearinghouse set up by the Recording Industry Assn. of America, has reached a deal with Webcasters on royalty rates, dodging a long and costly replay of last year’s copyright arbitration process.

Agreement, struck with the Washington-based Webcasters’ org the Digital Media Assn., applies to commercial subscription- and nonsubscription-based online broadcasts.

Nonsubscription sites can pay per song streamed, at a rate of 0.0762¢ each (as dictated by a Copyright Arbitration Royalty Panel last year). They can also pay on an hourly basis at a rate of 1.17¢. Subscription sites have the added option of using a flat-rate formula at 10.7% of gross revenues.

“The deal enables SoundExchange to avoid a protracted and costly arbitration with Webcasters that would have come on the heels of last year’s extraordinarily expensive arbitration,” said SoundExchange exec director John L. Simson.

In 2002, Webcasters and copyright holders engaged in a fierce debate over rates after the arbitration proceeding produced a result that neither side found acceptable. Rights holders said the old rates didn’t reflect the value of the music being streamed, while Netcasters — especially smaller, independent companies — said the rates threatened to put them out of business.

After both sides took their fight into the public eye and on to Capitol Hill, they finally reached a compromise that would let small Webcasters pay at a discounted rate, relative to their earning power.

Separately, the RIAA filed lawsuits Thursday against students at three different college campuses, accusing them of running Napster-style peer-to-peer services within the confines of their schools’ internal computer networks.

Two suits were filed against students at Rensselaer Polytechnic Institute, and one each was levied against students at Princeton and Michigan Technological U.

“The court ruled that Napster was illegal and shut it down,” said RIAA prexy Cary Sherman. “These systems are just as illegal and operate in just the same manner.”

The RIAA has settled similar complaints against corporations that housed thousands of pirated files on their own internal networks. Deals included a $1 million settlement last year with Arizona-based Integrated Information Systems.

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