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Webcasters Gain Temporary Reprieve

5/21/2002 10:57:00 AM Eastern

Washington D.C. - The Librarian of Congress rejected proposed Webcast royalty rates that many Webcasters claimed would put them out of business, but the reprieve is only temporary.

The royalty rates would have applied to non-subscription streaming-music services.

If the Webcasters were correct, the proposed rates would have reduced the number of streaming sites accessible by new Internet streaming devices designed for use with home audio systems.

The librarian rejected an arbitration-panel recommendation that webcasters, including Internet-simulcasting AM and FM stations, pay a per-song royalty rate to recording artists and record labels. Webcasters wanted to pay 3 percent of gross revenue to cover royalties, while the recording industry sought 15 percent.

The librarian will issue a rate schedule on June 20.

The rejected pay-per-play scheme is unique in the radio broadcast industry. Although AM and FM stations don't pay royalties to artists and record companies for over-air broadcasts, they do pay royalties to song writers and music publishers based on a percentage of revenues, not based on the number of times a song is played.

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