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Internet Music Royalties Spark Debate - 2002-04-26


As more people gain access to high-speed internet connections, they are downloading more music on their computers. Now big technology companies are fighting with music licensing associations over royalty payments for artists. A solution may be found through compromise and new technology.

Musicians, songwriters and record labels want to be paid for the use of their music on the internet. They are now reimbursed for radio broadcasts, but not for internet feeds originating in the U.S..

In late February, the U.S. copyright office released the recommendations of an arbitration panel after hearing from webcasters and music-rights holders on how royalties should be collected.

The most contentious issue is a proposal to retroactively collect fees back to 1998 for both radio stations that stream programs over the Internet and Internet-only streaming music services. Under the proposed terms many services of both types could be charged a minimum $500 per year license fee. Impending internet music fees were discussed at the recent convention of the National Association of Broadcasters in Las Vegas.

One of the critics is Larry Jacobson, the President of RealAudio internet service. He feels any move by government to impose license fees on internet only stations will be unfair to consumers and slow development of new technology. "Its, I think, a very dangerous world when the government starts setting technology standards. Because the world continues to innovate. We don't want to have the head of technology and the only choices in the world to be someone in government trying to make that decision. That will be a complete disaster. But that's what some of the media companies are trying to do cause they're very frustrated about privacy. It shouldn't be done, again - by the legislature," he says. "It should be done by the marketplace. And I think that the consumers will pay attention and will consume on a legitimate basis if its offered."

Led by the Recording Industry Association of America, those who represent the record companies, songwriters and musicians disagree.

John Simson is the Executive Director of Sound Exchange, a royalty collection agency for musicians. He says fees are not prohibitive and the argument is nothing new. "I think that broadcasters have always fought paying any royalties, originally to song writers and music publishers," he says. "But, they've never wanted to pay fees. Other countries do pay performance royalties to artists, and to record companies, or copyright owners, without such complaints. I think that some of the complaints are just unfounded. We've subsidized the radio business by giving them free music. This has created output, created by people who spend lots of time doing this, and they should be compensated for that. As they are in most other countries."

The world of digital technology is changing quickly. With the introduction of new 3-G, or third generation cell phones, the worlds of mobile communications and computing are becoming one.

Peggy Miles is the Chairman Emeritus of the International Webcasters Association. Based in Washington, DC. The IWA represents webcasters in North America, Asia, and Australia. She says the impending license fees will make it more difficult for radio stations to integrate the new technology. Radio stations, as they progress to digital from analogue to digital, have the opportunity to be on a lot of different devices. As we start to see, the new 3-G phones come out. As we start to see new environments for radio to be. Now, why would you not, as a radio broadcaster, want to be everywhere? At work, at home, in the car, on the PC. That's another audience for a radio station," she says. "So, if a radio station has to pay a lot more to webcast to broadcast their signal over the internet, or if a radio station wants to create internet only channels, maybe 10 or 15 different formats, they will have to pay a lot more than they've ever paid in fees to be able to webcast on the Internet."

The intense lobbying efforts of both sides will continue well past the May 21 deadline for proposed implementation of the new internet licensing fees. The U.S. Librarian of Congress, who regulates such matters, can adopt the current proposals or call for further review.

Any decision will only affect webcasts originating in the United States, and it remains unclear how the regulations could be enforced in a new medium, the internet, that knows no national boundaries.

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