BY PAUL MALONEY
RAIN has learned that the proposed measure to temporarily relieve webcasters of their royalty obligations, scheduled for a House vote today, has been pulled from the schedule.

Sources say that a marathon negotiating session between the record industry and webcasters over the past 24 hours failed to produce a settlement between the parties. Those involved were advised that they could subject the bill to a vote today, or go back to the table to reach an agreement on royalties by this Friday.

Though the terms being discussed are private, RAIN understands that they do in fact involved a deal based on a percentage of webcasters' revenues. The terms of an agreement reached on Friday would be accepted by Congress as law for the industries. This law would thus override the Librarian of Congress's original determination for webcasting royalties, and eliminate the need for the next scheduled arbitration (CARP).

A spokesman for the House Judiciary Committee (which HR 5469's sponsor, Rep. James Sensenbrenner (R-WI, pictured), chairs) confirmed that the bill was pulled from the voting schedule, and said an official statement would be made later this afternoon.




BY PAUL MALONEY
House Judiciary Committee ranking Democrat John Conyers (MI) has circulated a letter among colleagues urging them not to vote for HR 5469, claiming the measure would "rip up the paychecks of working musicians, vocalists, and artists" by denying them royalties.

The letter, obtained by RAIN just this afternoon, contends HR 5469 "proposes that everyday vocalists, background musicians, and recording artists receive no payment for four years' of broadcasts."

The House is scheduled to vote on the bill today. It was introduced by Committee Chairman James Sensenbrenner (R-WI) last week (see RAIN here) to protect webcasters from royalty fees while those fees themselves were subject to court appeal by both webcasters and the record labels. Published reports later indicated that Conyers (pictured right) would contest the bill (see RAIN here).

Two-thirds of the way through the letter Conyers does acknowledge that the measure proposes a postponement of fees, not their cancellation.

"These artists have been waiting four years to get paid," the letter reads, "and this bill would make them wait at least another six months."

Later, Conyers goes on to accuse the Internet radio industry of trying to get a "royalty-free ride" on the work of artists, even after encouraging artists to get involved with the new media.

"(The bill) would mean less income for (artists) and their families for the sole reason that Internet companies don't want to pay for the music on which they are building their businesses. What is even more surprising is that, for the past several years, the Internet companies have been encouraging the creative community to make its songs available online....(now) these same companies are pushing Congress to give them the music for free."

...

... So misleading are the statements made in this letter that they seem much more appropriate in the context of something one would read on the RIAA or SoundExchange websites than in a letter from a U.S. Congressman. Of course, one need only read the actual language of Sensenbrenner's bill (and we invite you to do so by clicking here if you have an Adobe Acrobat reader) to realize how far off course Conyers is. In fact, the first eight words in the body of the bill happen to be: "To suspend for a period of 6 months..." Certainly, Conyers does eventually acknowledge that this proposal is asking for a "suspension," nothing more. But only after he says HR 5469 would "Rob Working Artists, Vocalists, and Musicians." He finishes the letter by calling the proposal "anti-artist, anti-musician, and anti-vocalist." Worse yet, he parrots the record industry's aspersion that webcasters "don't want to pay" for the work of artists upon which they "build their businesses." The fact that the vast majority of webcasters have accepted their obligations to pay sound recording royalties should be amply evident by: (1) the number of private agreements several webcasters have reached with the RIAA, (2) the required filing made by webcasters with the RIAA of their intent to comply with the statutory regulations when they are determined, and (3) the ongoing (and so far fruitless) negotiations between small commercial webcasters and the RIAA to reach an agreement before October 20. These facts notwithstanding, the record industry (and now Rep. Conyers) insist on putting the "black hat" on the webcasters, a move that can only squander the opportunity to reach a mutually beneficial agreement. Mr. Conyers, who's writing your letters these days? -- PM ...

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The International Webcasting Association will begin a 20-day live webcast from Las Vegas today to raise awareness of the struggle of small Internet radio stations to save their businesses. The webcast will coincide with a fund raising campaign to help webcasters defend their businesses in court.

"Countdown to Save Internet Radio" begins at 2pm CDT (3pm EDT) today, and will be streamed from websites Save Internet Radio.net and Save Internet Radio.us.

Today the US House of Representatives is scheduled to vote on HR 5469, an emergency measure sponsored by Judiciary Committee Chairman James Sensenbrenner (R-WI), which would postpone royalties webcasters are obligated to pay the owners of sound recording copyrights (see RAIN coverage and analysis here and here).

In 20 days, the first of such payments (for the retroactive period of October 28, 1998 through August 31, 2002) is due. Small webcasters contend that this first payment alone, being so disproportionate to their revenues, would drive them into bankruptcy.

Several webcasting organizations have filed court appeals of the royalty determination, but those have not yet been scheduled and won't be heard for some time. HR 5469 was designed to allow the webcasters to survive until their appeals are heard.

According to the sites, the programming will feature a mix of music and discussions of the issues, with daily updates and special reports on legislation. A copy of today's schedule is here.

The sites themselves offer links to related websites, information on how visitors can contact their Congressmen to express their support, and a mechanism to collect donations to benefit the International Webcasting Association Legal Defense Fund.

(While this publication supports the efforts of the IWA and the webcasters, the webcast and sites are not part of RAIN Publications or affiliated with this company's Save Internet Radio.org.)

From today's early edition...

From Forbes: "The record business is afflicted by digital piracy, CD burners, slumping sales and a paucity of hits. And soon it is likely to lose a nascent source of free marketing — hundreds of amateur Webcasters who use the Internet to create their own radio stations. The music labels have themselves to blame.

"Come Oct. 20, anyone broadcasting free music over the Web will start paying royalties to a record industry consortium. The fees seem minimal: seven-tenths of a cent per song played, per listener. But for the small stations and hobbyists that make up the bulk of Webcasters, even that tariff may be too steep.

"Wanda Atkinson, who runs 3WK Underground Radio with her husband out of their St. Louis home, figures they'll be on the hook for $2,400 a month, or 75% of the total revenue they generate (via ad sales and donations) playing an eclectic mix of alternative rock. The first royalty bill, retroactive to 1998, will be a doozy — perhaps as much as $50,000, she says...

"Even if the royalty rates were doubled, the money the labels would receive would amount to a rounding error for the $13 billion industry — perhaps $10 million annually...

"The Atkinsons and a group of small Webcasters are making a last-ditch effort to reduce or hold off the rates. If they don't succeed, Internet radio is likely to end up looking much like its conventional counterpart — dominated by a handful of media giants, who will have the same kind of clout that record labels now complain about when trying to get their songs on the radio."

Read this entire article in the October 14th issue of Forbes, or read it online here.