INTERNET radio stations in the US last week won a reprieve from a potentially crippling levy that they claim would have driven most of them out of business. But they鈥檙e not out of the woods yet.
The stay of execution came from James Billington, the Librarian of Congress, who rejected a proposal from the US Copyright Office that webcasters should pay the music industry 0.14 cents per listener per copyrighted track.
While this sounds like small beer, for many webcasters it鈥檚 a levy that would far exceed their earnings, says John Jeffrey, a vice-president at Live365, an Internet radio station based in Foster City, California. In April, Live365 earned about $100,000, but says it would have owed $180,000 under the proposed royalty rate.
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Because webcasters 鈥渟tream鈥� music to their listeners, each track is sent over the Web a fragment at a time, and no complete copy of the track is ever downloaded to the listener鈥檚 computer. So webcasters argue they鈥檙e more like broadcast radio stations than download services such as Napster, which distribute whole songs.
Nevertheless, Congress decided in 1998 that webcasters would have to pay a performance royalty on their songs, over and above the 鈥渘eedle-time鈥� royalties that radio broadcasters pay. Congress left it up to webcasters to negotiate the rates with the Recording Industry Association of America. When those negotiations failed, the Copyright Office proposed a rate of its own.
But it鈥檚 far from certain that Billington will now set a lower rate. The RIAA wants it raised, arguing that webcasters are exaggerating the costs they鈥檒l face. Net radio stations outside the US could also suffer if they garner a lot of listeners in the US: the RIAA may come after them for royalties too.