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Librarian of Congress to set Web tune fee

Net royalty fee up in air

In a cliffhanger, U.S. Librarian of Congress James Billington on Tuesday rejected a proposed royalty rate for streaming music on the Internet, saying he will come up with his own figure, prolonging a fierce fight between the recording biz and Webcasters over what is a fair price.

The National Assn. of Broadcasters joined Netcasters in cautious optimism at Billington’s ruling, since they had asked him to void the rate put forth earlier this year by the official Copyright Arbitration Royalty Panel. But they weren’t prepared to declare victory just yet.

Tempered relief

“There’s definitely the initial relief that it’s not going to go down exactly as the CARP proposed,” said Kevin Shively, director of online media at Beethoven.com. “But I don’t think any of us are ready to jump up and down and open the champagne bottles.”

Webcasters repeatedly had argued that the CARP proposal would put them out of business, and last week made their complaints known at a Capitol Hill hearing.

Earlier this year, CARP — which was assembled by the U.S. Copyright Office, acting on a mandate from 1998’s Digital Millennium Copyright Act — established a per-play royalty rate of 0.14¢ for Internet-only broadcasters, and 0.07¢ for off-line radio stations duplicating their programs in cyberspace.

Some industry execs said it was unfortunate that Billington didn’t embrace the CARP rate, arrived at after months of deliberation and testimony.

“It was a process, not a kangaroo court,” a music exec said.

But the music industry wasn’t entirely happy with CARP’s rate, which essentially split the difference between the proposals from the rival camps. The Recording Industry Assn. of America and artist groups had asked Billington to set the royalty at a higher rate.

Billington’s two-paragraph ruling provided no hint as to the reasons for his decision to uphold the recommendation of Marybeth Peters, register of Copyrights, that the CARP finding be scuttled. Billington now has 30 days in which to revise the rate.

“NAB is pleased the librarian of Congress has rejected the rates and terms recommended by the CARP for the use of sound recordings for Webcasting,” NAB veep for law and regulatory policy Jeff Baumann said.

Wait and see

RIAA prexy Cary Sherman said it was pointless to try to read Billington’s mind. “Since both sides appealed the panel’s determination, anything is possible. We look forward to the conclusion of this process on June 20, and to the day when artists and labels finally get paid for the use of their music.”

Digital Media Assn. exec director Jonathan Potter disagreed, saying in a statement that Billington’s ruling “offers hope that the final royalty rate will be more in line with marketplace economics than was the arbitrators’ proposal.”

He said Congress’ intention in enacting the new royalty was to promote the Internet and artists’ welfare.