THIS WEEK:                                                       p15 01 Jun
02
 #17  After Napster, it's Web radio in the firing line

 Kurt Kleiner; Toronto

INTERNET radio stations in the US last week won a reprieve from a
potentially crippling levy that they claim would have driven most
of them out of business. But they're not out of the woods yet.

The stay of execution came from James Billington, the Librarian of
Congress, who rejected a proposal from the US Copyright Office
that webcasters should pay the music industry 0.14 cents per
listener per copyrighted track.

While this sounds like small beer, for many webcasters it's a levy
that would far exceed their earnings, says John Jeffrey, a
vice-president at Live365, an Internet radio station based in
Foster City, California. In April, Live365 earned about $100,000,
but says it would have owed $180,000 under the proposed royalty
rate.

Because webcasters 'stream' music to their listeners, each track
is sent over the Web a fragment at a time, and no complete copy
of the track is ever downloaded to the listener's computer. So
webcasters argue they're more like broadcast radio stations than
download services such as Napster, which distribute whole songs.

Nevertheless, Congress decided in 1998 that webcasters would have
to pay a performance royalty on their songs, over and above the
'needle-time' royalties that radio broadcasters pay. Congress
left it up to webcasters to negotiate the rates with the
Recording Industry Association of America. When those
negotiations failed, the Copyright Office proposed a rate of its
own.

But it's far from certain that Billington will now set a lower
rate. The RIAA wants it raised, arguing that webcasters are
exaggerating the costs they'll face. Net radio stations outside
the US could also suffer if they garner a lot of listeners in the
US: the RIAA may come after them for royalties too.


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Copyright 2002 New Scientist, Reed Business Information


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