• by Ken Liebeskind , September 16, 2002

With Congress back in session after the August recess, the legislator who introduced the Internet Radio Fairness Act in July has revived it. His goal is to pass it before Oct. 20, the day Webcasting fees are due to be paid.

The legislation would relieve small Webcasters from paying the fees set by the Librarian of Congress in June until a new rate structure could be established. "It's a balloon payment," Kevin Shively, business and Web development manager of Beethoven.com, says of the fees due Oct. 20, which are retroactive to Oct. 28, 1998, when Congress passed the Digital Millennium Copyright act.

U.S. Rep. Jay Inslee (D-WA), a sponsor of the Fairness Act, spoke Saturday at the National Association of Broadcasters convention in Seattle on Saturday. He has also been sending out letters to fellow Congressmen, soliciting their support. "New royalty rates set to go into effect are threatening the future of this industry," he writes. The letters ask Congressmen to cosponsor the legislation and so far 26 legislators have agreed to do it. Inslee has also been working with the Judiciary Committee to get movement on the bill.

The legislation is one solution to the problem for small Webcasters. The other is to solve the problem internally by reaching an agreement with the Recording Industry Association of America, which seeks the fees on behalf of performers and record labels. The inability of these parties to reach an agreement in the first place led to the imposition of the fees by the government, but negotiations have resumed since July in an effort to establish fees that are acceptable to both parties.

"The RIAA wants to be able to close the deal," says Kevin Shively, business and Web development manger of Beethoven.com, a small Webcaster that has been negotiating with the RIAA. "But there are significant differences about what we can afford and what they're willing to allow." According to Shively, the sides are discussing a percent of revenue deal, which would replace the per performance fees now in the books, which are too high for small Webcasters. "They're willing to go along with it, but what is the percent," he says, not willing to release the numbers either side has proposed.

The RIAA declined to comment for this story.

Since the negotiations between Webcasters and the RIAA aren't working, Shively says, "Action by Congress may be the only thing that can help us." Small Webcasters will initiative a drive to spur Congress, with a "31 day countdown to save Internet radio" planned to begin Sept. 19. Originating in Las Vegas, the countdown will be a Webcast that will seek to drum up support for the legislation and motivate listeners to appeal to their Congressmen to support the Fairness Act.

The countdown is reminiscent of the day of silence held by small Webcasters in May to protest the fees proposed by the Copyright Royalty Arbitration Panel.

It remains to be seen whether it will motivate Congress to pass the legislation. Shively says if the legislation doesn't pass by Oct. 20, Congress could issue a moratorium on the payments. "We may need to address a moratorium to give us more time," he says. But Sara O'Connell, Rep. Inslee's press secretary, says there are no plans in Congress for a moratorium, which would be issued by the Judiciary Committee. "It's a stretch," she says, while admitting it could possibly occur if nothing is settled by the last minute.