The Webcasting bill passed by Congress early Friday morning could save many small Internet radio stations from financial ruin, but it does little to solve the fundamental problems facing the Webcasting industry.
The bill, H.R. 5469, leaves numerous Webcasters in the same dilemma they've been in for months: Unless they can persuade record labels to accept lower fees, they'll have to pay a sizable amount of their revenues in royalties to labels and artists.
The measure would give SoundExchange -- the royalties arm of the Recording Industry Assn. of America -- the freedom to strike deals with small commercial Webcasters and noncommercial Internet stations, including college and community broadcasters. It also would give those Webcasters a one- to six-month reprieve from royalties so they can try to negotiate discounts.
One group of small Webcasting businesses already has reached agreement with the RIAA, and the bill would allow them to implement that deal. The same terms would be available to other small Webcasters, but some say the rates -- either 8% to 12% of revenue or 5% to 7% of expenses -- are unacceptably high.
The prospects for other Webcasters seeking lower rates aren't good, said attorney David Oxenford, who bargained for the group. "I know how hard our group had to fight to get the numbers that we got," he said.
But the political support that small Webcasters found in Congress should help them as they seek better terms, said Alex Alben, vice president for public policy at Webcasting technology firm RealNetworks Inc.
"I think the RIAA is negotiating in good faith to create a stable base for Webcasting," Alben said. "And they should, right? They get paid a royalty on Webcasting; they don't get paid a royalty on regular broadcasting."
Internet radio has grown rapidly in popularity since it was launched in the mid-1990s. Its hallmark is a diversity of programming that's hard to find on conventional radio.
That's why many artists and labels are eager to see Webcasting flourish. However, they want entrepreneurs to pay for the music they use to build their businesses.
Despite their growth, many Webcasters have struggled financially in the midst of a broad advertising slump. Low royalties, they say, will give them time to establish themselves.
Stations that don't strike their own deals must pay the rates set in July by the Librarian of Congress: 0.07 cent per listener per song for commercial stations, and 0.02 cent for noncommercial ones.
