Webcasting: It's a deal!

A deal was finally reached between Webcasters and the Recording Industry Association of America on the royalty fees Webcasters will pay.

The deal, concluded yesterday between Webcasters, the RIAA and the House Judiciary Committee, sets the retroactive fees Webcasters will pay going back to 1998 when the Digital Millennium Copyright Act was passed, and the fees they will pay for the next two years.

Last Tuesday, Rep. James Sensenbrenner (R-WI) pulled the legislation he was going to put up for a vote that would have suspended the fees for six months. He said the parties had agreed to come to terms by Friday. That didn't happen, but after negotiations continued into the weekend, an agreement was finally reached yesterday. The agreement, being called the Small Webcaster Amendment Act, could soon be ratified by Congress.

Kevin Shively, a marketing director at Beethoven.com and chair of the International Webcasting Association Legislative Committee, who was involved in the negotiations, says a percentage of revenue deal was finally worked out.



Webcasters will pay 8% of their revenue or 5% percent of their expenses or a $2,000 minimum (whichever is greater) for 1998 to 2002. For the next two years, they will pay 10% of their revenue up to $250,000 and 12% for any amount over that up to $500,000. Any Webcaster earning over $500,000 the first year and $1.25 million the second year will pay the full rates enacted by the Copyright Arbitration Royalty Panel earlier this year. He thinks payments will begin in January.

"It's a deal I doubt many Webcasters would have agreed to if they weren't at risk of their business being shut down by the CARP rates," Shively says. "We initially asked for 5% and they asked for 12% and we ended up with 10 and 12, so they got what they wanted, they have more power."

While Shively expressed disappointment at the rates, he expressed gratitude for the intervention of Congress. "We're grateful to members of the Judiciary Committee for their involvement. We wouldn't have gotten this agreement without it."

The RIAA released a brief statement this morning, saying, "The RIAA announced support for the Small Webcaster Amendment Act. The act embodies compromise for everyone involved. We appreciate the assistance of Congressional leaders in helping move this process along. We look forward to building a business partnership that creates the best possible music experience for fans."

According to Shively, it doesn't create the best possible experience for the musicians who the fees were created for, which he sees as a threat to the entire agreement. "Apparently, it's been reported there are terms in the deal that would allow the RIAA or Sound Exchange to recoup legal fees before giving any money to artists. It could take years before artists see any money because legal costs were as high as $18 million. We don't like that after we agreed to the deal additions were added that may hurt artists. We want to see it taken out."

He says the American Federation of Radio and Television Artists and the AFL-CIO, which support artists, may challenge the agreement.

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