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Non-Commercial Webcasters Reach Royalty Deal

The recording industry has reached an agreement on royalty rates and terms with non-commercial webcasters such as Internet-only webcasting operations and college radio stations. The deal means that the recording industry has now negotiated agreements covering every Internet, cable and satellite radio company.

The agreement discounts rates for webcasts during the period 1998-2002 as well as for the 2003-04 period. The deal, reached under the terms of the Small Webcaster Settlement Act (SWSA), will be effective automatically when the U.S. Copyright Office publishes it and avoids another arbitration round with the Copyright Office

"We are extremely pleased to have reached this agreement with non-commercial webcasters, including college webcasters. We recognize that non-commercial webcasters operate under different conditions than for-profit webcasters," said Steven Marks, SVP for business and legal affairs at the Recording Industry Association of America (RIAA). "The agreement includes an accommodation for non-commercial stations while avoiding a costly arbitration."

Added Fritz Kass, director and head of operations at the Intercollegiate Broadcasting System (IBS), "The IBS is extremely pleased that the great music diversity which for IBS' 63 years of continuous service has been the hall mark of college radio will now thanks to the music industry's agreement leap worldwide on the Internet."

During the past several months, the members of SoundExchange, led by the Recording Industry Association of America (RIAA), and the American Federation of Television and Radio Artists (AFTRA) and the American Federation of Musicians (AFM), have struck licensing agreements with satellite radio companies, XM and Sirius; cable/satellite music services Music Choice, Muzak and DMX; commercial webcasters such as RealNetworks, AOL, MusicMatch, Microsoft, Yahoo! and Full Audio; and radio station groups that simulcast over the Internet, such as Bonneville International Corp., Clear Channel Communications, the National Religious Broadcasters Music Licensing Committee, Salem Communications Corporation and Susequehanna Radio.

"This agreement provides some relief for non-commercial radio stations that have been streaming their broadcasts over the Internet. It will also allow some of these stations to operate in 2004 as we continue to pursue fair rates and terms for streaming," said Russell Hauth, executive director of the National Religious Broadcasters Music License Committee.

In 1998, Congress passed a law requiring Internet music broadcasters pay royalty fees to artists and music labels for use of their music. Webcasters and the music industry were unable to reach agreement on the fees, however, and the dispute went to arbitration, a process that cost both sides millions in legal fees.

Through the arbitration process, the Copyright Office set rates for 2002 and until the recent agreements, it was preparing for another arbitration process between the warring parties.

In April, webcasters and the recording industry agreed to royalty rates and terms to apply to commercial subscription and non-subscription-based webcasters and Internet radio.

The agreement allows non-subscription webcasters to pay on a per performance or aggregate tuning hour basis, and offers an additional gross revenue option for subscription services. Webcasters can choose to either pay 0.0762 cents per song per listener or 0.0117 cents per listener hour. Internet radio subscription services can also choose to pay 10.9 percent of their subscription fees. The deal is effective for 2003-2004.