Small Web Radio Stations to Pay Lower Royalties
WASHINGTON (Reuters) - Smaller Internet broadcasters won a stay of execution over the weekend as musicians and record labels agreed to accept lower royalty payments that could prevent many from going out of business.
Webcasters were due on Monday to begin payments to the artists and record labels whose songs they use, but mom-and-pop operators will now only have to pay a maximum of $2,500 rather than a per-song rate that could add up to tens of thousands of dollars more.
Many small operators had protested that the per-song rate, set by the Library of Congress in June, could drive them out of business.
The two sides had reached a compromise a few weeks earlier that would allow small Webcasters to pay a percentage of their revenue or expenses, with the hopes that Congress would pass it into law before payments were due on Sunday.
Larger Webcasters, such as America Online and Yahoo are not covered by the deal.
The measure won approval in the House of Representatives, but failed to clear the Senate late last week after North Carolina Republican Jesse Helms objected.
Both houses of Congress are now in recess until after the November elections, when they must return to tackle unfinished business.
After the Senate failed to act, the group set up to collect most royalty payments said it would stick with the lower payments, even though it would be allowed to charge the higher rate.
Small Webcasters will now pay a flat rate of $500 for every year they have been in business since 1998.
"We didn't want to cause any undue hardship," John Simson, executive director of the SoundExchange clearinghouse, said on Monday.
Simson's organization represents the recording industry's five major labels -- Warner Music, EMI, Universal Music, BMG and Sony Music -- as well as 380 independent labels.
Since SoundExchange does not cover roughly 10 percent of the recorded music available, Webcasters could still have to pay the higher rate of 0.07 cent per song per listener for some of the songs they play.
Simson said he was optimistic that the Senate would pass the deal into law when it returns for its lame-duck session in mid-November.
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