• by Ken Liebeskind , October 2, 2002

Small Webcasters were hoping for relief from Webcasting royalty fees yesterday in the form of legislation that would have suspended the fees for six months. They didn't get it.

House Judiciary Committee Chairman James Sensenbrenner (R-WI) scuttled the bill he was intending to bring to the floor yesterday and never brought it up for a vote.

He released a statement saying, "I requested the House leadership pull today's scheduled consideration of H.R. 5469 at the request of the interested parties. The parties involved have assured me they will reach a compromise agreement by Friday that will be fair to Webcasters, record companies and recording artists as well as provide the economic certainty and stability necessary for Webcasters large and small to succeed. I anticipate legislation codifying this agreement will be considered by the House next week."

Sensenbrenner's statement is accurate, but it hardly tells the full story. Kevin Shively, a marketing director at Beethoven.com and chair of the IWA Legislative Committee, says, "We all sat down in front of Sensenbrenner and he said are you going to make a deal and everybody said yes, so we have to come up with something."

The meeting, which included large and small Webcasters and the Recording Industry Association of America, which supports the fees, took place in Sensenbrenner's office yesterday, but it was preceded by action taken by other Congressmen to oppose the legislation. A letter circulated yesterday by Reps. John Conyers (D-MI), Carolyn McCarthy (D-NY) and Howard Burman (D-CA) sided with the music industry, which would lose the fees if they were suspended. "Members of Congress should not force musicians to give big Internet radio companies another interest-free loan on the use of their music. Congress should instead be telling these big companies to pay up and pay up now!" the letter said.

After learning of the legislators' action, Sensenbrenner warned Webcasters that the bill might not pass and if it didn't no more action would be taken in Congress to support them. A two-thirds vote in both houses of Congress would have been needed to pass the legislation. "He said he'd pull it rather than take the chance of losing," Shively says.

He says Webcasters agreed with him because "we had no choice." Now he says "our one opportunity is we have the chairman telling record labels they have to negotiate with us."

Negotiations to date have failed to reach a deal and now there are three days left. "There's going to be a deal. We're continuing to go back and forth. Meetings are scheduled until it's done," he says.

The RIAA released a statement yesterday, saying, "We've been trying to close a deal with the Webcasters for months and this is a great opportunity to find common ground. We are encouraged by the prospects of reaching a resolution."

Sensenbrenner's statement about legislation codifying the agreement means that once a deal is reached between Webcasters and the RIAA it will be sanctioned by Congress, which will approve it quickly once the parties agree, Shively says.