Legislation seeks to limit webcasting royalties

Proposed legislation designed to save Internet webcasting has been introduced in Congress. Called the Internet Radio Equality Act, the measure would stop a new royalty scheme that Internet broadcasters say will shut them down because it will cost them too much money.

Reps. Jay Inslee, D-WA, and Don Manzullo, R-IL, introduced the legislation in the House. It seeks to reverse a March 2 decision of the federal Copyright Royalty Board (CRB) to nearly triple the amount of royalties Internet webcasters pay to copyright holders for playing a song.

The Copyright Royalty Board approved a rule that would force commercial Internet broadcasters, regardless of their size, to pay a new, higher flat fee to the record labels each time a song is played. Royalty rates for webcasters — starting retroactively at 0.0008 cents per song in 2006 — will climb to 0.0019 cents per song in 2010. The new rates are set to go into effect May 15.

"This titanic rate increase is simply untenable for many Internet radio broadcasters," Inslee said. Manzullo noted that if the bill passed it would overturn the huge rate increases and set up a system that is fair both to webcasters and the artists who record the music.

The legislation proposes that webcasters continue paying a percentage (7.5) of revenues through 2010. Alternatively, the bill would allow webcasters to choose to pay 33 cents per hour of sound recordings transmitted to a single user.