Broadcasters Back Internet Radio Bill

Broadcasters threw their considerable support behind legislation to
reverse the Internet radio royalty rates set in March by the Copyright Royalty
Board (CRB). The controversial rate hike has roiled the industry for months.

The National Association of Broadcasters (NAB) Wednesday said it was supporting the
Internet Radio Equality Act (IREA) after SoundExchange, which negotiates and
collects royalties for labels and artists, ignored a counter proposal sent by
the NAB on June 6.

“We are disappointed by SoundExchange’s continued reluctance to respond to the
good-faith, reasonable offer put forth by NAB nearly two months ago,” NAB
Executive Vice President Dennis Wharton said in a statement.

The IREA, introduced by Reps. Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.),
which would vacate the CRB decision and apply the same royalty rate-setting
standard to commercial Internet and satellite radio.

Inslee’s bill would set a 2006-2010 royalty rate at the same level currently
paid by satellite radio services, which is 7.5 percent of revenues. The IREA
has gained 140 co-sponsors since it was introduced
in April. Similar legislation is pending in the Senate.

“NAB will now turn our attention to aggressively advocating in support of Rep.
Inslee’s legislation to ensure that local radio broadcasters who stream
content online are treated fairly,” Wharton said.

After more than a year of deliberations, the CRB in March raised the royalty
rate for Internet radio to $.0008 per song played for 2006, $.0011 for 2007,
$.0014 for 2008, $.0018 for 2009 and $.0019 for 2010. Most webcasters now pay
a rate of $.0012 per stream.

The rate ruling prompted an immediate outcry from webcasters who claimed the new
rates would drive the industry into bankruptcy. After losing a bid for a stay
of the rates, webcasters have subsequently been in intense negotiations with

Although there have been no firm agreements, SoundExchange has extended new
offers to small webcasters that would effectively keep their streaming fees at
2002 rates.

SoundExchange and large webcasters, though, remain at an impasse over the

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