Bill would nullify Internet radio royalty increase

Supporters say it would save webcasters from bankruptcy

In a show of bipartisan support for online radio, U.S. Reps. Jay Inslee (D-Wash.) and Donald Manzullo (R-Ill.) have filed legislation they hope will "prevent the demise of Internet radio."

The Internet Radio Equality Act would reverse a recent decision by the federal Copyright Royalty Board that would at least triple the amount of royalties Internet radio broadcasters must pay to copyright holders to play a song, according to a statement from Manzullo's office.

Under the board ruling, royalty rates will be changed from a percentage of revenue to a per-song, per-listener fee. The entities affected include pure-play Internet radio stations, digital music stations like Pandora.com and traditional broadcast stations that also stream their programs. The new rates, which would be retroactive to 2006, would increase until 2010.

According to Inslee and Manzullo, the new rates amount to a 300% increase for the largest webcasters and up to a 1,200% increase for smaller operations.

The Inslee-Manzullo Internet Radio Equality Act would provide royalty parity for Internet radio providers, the statement said. It would vacate the royalty board's decision and apply the same royalty rate-setting standard to commercial Internet radio, as well as satellite radio, cable radio and jukeboxes. A transition rate of 7.5% of revenue would be set through 2010.

"The Internet has provided us with amazing opportunities to enjoy music, and this unfair action by the CRB threatens to take it all away," said Manzullo in the statement. "Our legislation overturns the huge rate increases and sets up a system that is fair to webcasters, Web users and the artists whose music we all enjoy. And most importantly, it will keep music playing on the Internet."

Christine Hanson, Inslee's spokeswoman, said "Congressman Inslee has been a long-term proponent of media diversity. He thinks that putting radio broadcasters out of business because of these fees is not in the best interests of democracy."

The SaveNetRadio coalition applauded the legislation and said it could save thousands of webcasters from bankruptcy.

"Since the CRB's March 2 decision to dramatically and unfairly increase webcaster royalty rates, millions of Internet radio listeners, webcasters and artists have called on Congress to take action," said Jake Ward, of the SaveNetRadio coalition, in a statement. "Congress took notice, and we thank Messrs. Inslee and Manzullo for leading the charge to save music diversity on the Internet."

Copyright © 2007 IDG Communications, Inc.

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