Senate Bill Would Lower Online Music Royalty Rates - InformationWeek

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5/14/2007
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Senate Bill Would Lower Online Music Royalty Rates

Those backing the legislation want to make sure that Internet, satellite, cable radio, jukeboxes, and traditional radio pay the same rates for playing songs.

The U.S. Senate has introduced a bill to overturn the Copyright Royalty Board's decision to raise royalty rates for streaming music online.

Senators Ron Wyden, an Oregon Democrat and Sam Brownback, a Kansas Republican, introduced the "Internet Radio Equality Act of 2007" last week. The bill is a companion to similar legislation introduced in the House just over two weeks ago.

According to Neilson Media Resarch, 70 million Americans listen to online music stations every month. Those backing the congressional legislation want to make sure that Internet, satellite, cable radio, jukeboxes, and traditional radio pay the same rates for playing songs.

The copyright board increased royalty rates for streaming online music, mandating a retroactive rate of $0.0008 per song for 2006, up from $0.0007 in 2005. The ruling, announced March 2, set gradual increases to $0.0019 per song by 2010. It also requires a $500 per-station fee and eliminates an existing option of paying based on a percentage of revenue.

Digital media representatives claim that the rate structure changes amount to increases up to 300% for large operations and up to 1,200% for smaller ones.

SoundExchange, which represents record labels and artists, said the proposed legislation would "gut the fair market rates." John Simson, executive director of SoundExchange, argues that the bill would require take tens of millions of dollars from artists to benefit large corporate webcasters.

Free Press Associate Policy Director Frannie Wellings disagrees.

"The CRB ignored massive public outcry to push forward this disastrous royalty rate hike," she said in a prepared statement. "The new rates fail to distinguish noncommercial webcasting as a unique service and create an unmanageable rate-hike for everyone streaming music online -- noncommercial webcasters, small upstarts and even the largest commercial companies. This bill recognizes that nonprofit webcasters like NPR should not be forced to pay so much money that they actually fear an increase in their listenership. And it sets a reasonable, balanced rate for everyone."

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