Harmony on the Horizon for Broadcasting, Music Industries?

The heated battle over whether or not broadcasters should pay royalties when they play their stations’ programming online, may soon
be reaching a truce as music companies and radio firms apparently reached a tentative settlement last Friday.

According to the Wall Street Journal, a document submitted to the U.S. Copyright Office said that the clashing organizations,
which include the National Association of Broadcasters (NAB) and the Recording Industry Association of America (RIAA), have signed
“a contingent agreement concerning the royalty fees.” Terms of the deal were not disclosed.

The Copyright Office currently oversees the proceedings, which are hashing out how much record companies should receive in royalties from
broadcasters when their songs are used in Webcasts. Interestingly, broadcasters don’t pay recording firms for
their broadcasts over the airwaves, so, naturally, they’re been fighting royalty payments tooth and nail, claiming it goes against the
grain of the U.S. Copyright Act. According to the filing last week, the new agreement depends on the Copyright Office, which must
allow the continuing arbitration to resolve other issues, including the rate that will be paid by Webcasters who offer music online
but don’t own radio stations.

After the proceedings are complete, according to the document, rates for broadcasters included in the settlement would have industry-wide validity and become public.

The news is the latest in what has basically been a two-year-plus battle, with radio companies claiming they shouldn’t have to pay any
royalties when they air programs online. They, in fact, sued record labels over the issue, and went so far as to try to stick it to
the Copyright Office after regulators decided they were subject to the Webcast royalty fee.

The Copyright Office dealt a blow to broadcasters Dec. 8, when it ruled that they must pay royalties for music played on the
Internet when radio signals are simulcast online. That decision came months after an Eastern Pennsylvania District Court judge threw
out a suit filed by NAB to oppose paying Webcasting royalties.

The resolution comes a couple of weeks after a U.S. District Court in New York approved an interim license agreement for radio stations
streaming content
on the Internet. Radio stations agreed to pay performing rights group Broadcast Music Inc. (BMI) 1.605 percent
of the station’s streaming Internet revenue.

The tentative deal also comes at a time when airing and selling music over the Web is becoming serious business for the Big 5 recording
companies, with their MusicNet and pressplay incarnations, and a few other independent firms, such as Listen.com, with its Rhapsody
service. Not surprisingly, then, and in no small part due to the furor Napster and other file-swapping enablers have caused in the
industry, these services are also under governmental scrutiny.

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