Congress Resolves Webcasters Royalty Debate

Both the U.S. House of Representatives and the Senate pushed through legislation early Friday morning allowing copyright owners to offer webcasters a percentage-of-revenues royalty rate, essentially allowing the parties to mutually agree to override the controversial flat per-song rate set by the Library of Congress (LOC) in June. Small webcasters hailed the legislation as a “stunning victory.”

When the LOC set the flat rate plan, small webcasters protested it would put them out of business. Throughout the summer and into October, negotiations between copyright owners and small Internet radio stations produced a compromise allowing small webcasters to pay a flat annual fee or a percentage of their revenues instead of the per-song rate.

The House passed legislation (H.R. 5469) that approved the compromise deal, but the bill failed to pass muster in the Senate before the midterm election break. Thursday night, both chambers crafted language supported by virtually all players on both sides of the debate, including the record industry, artist representatives, large and small webcasters, college radio representatives, and religious broadcasters.

The key difference between the bill that the House passed in October and the revised bill is that Congress did not establish any definition of “small webcaster” or set any royalty rates in the final version of the legislation.

Instead, the legislation grants copyright holders and webcasters the right to enter into a voluntary agreement “without fear of liability for deviating from the fees and terms” the LOC’s rate ruling.

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