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Deal Reached on Royalties for Web Music


Online radio company in Irvine struck a licensing agreement Wednesday with the Recording Industry Assn. of America to pay royalties to major-label artists whose works are broadcast on the Web.

The deal could help set a possible standard for online music broadcasters, which have been embroiled in a contentious fight with the RIAA over who will profit from music streamed over the Internet.

The Washington-based trade group, which represents record labels, has been trying to collect music royalties for the past year from hundreds of Web broadcasters under the Digital Millennium Copyright Act of 1998.

The terms of the deal were not disclosed. But analysts say the agreement could give the RIAA a boost in its efforts to establish an industry standard because is one of the largest online broadcasters. The recording group could point to the agreement as evidence of both an industry willingness to pay the royalty, as well as what a fair market price should be.

Founded a year ago, broadcasts original programming of 300,000 songs on more than 200 of its Internet-only music stations. The company, which has a staff of 85 and a large studio facility in Santa Monica, makes its money from advertising and licensing its broadcasts to other Web sites.

The recording industry group has been in talks with other Web broadcasters, but to date has signed only a few royalty deals, said Steven Marks, senior vice president of business affairs for the RIAA.

"We're in negotiations with a lot of people right now," he said. "If those negotiations don't succeed, we will proceed to arbitration."

Some of the 41 members of the Digital Media Assn., a group that represents some of the biggest online audio and video companies, including MTV and America Online-owned, are preparing for arbitration with the RIAA over this issue, officials said.

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