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House Passes New Internet Radio Legislation

Bill would enable negotiations on royalties to continue after Congressional recess

By Martin H. Bosworth
ConsumerAffairs.com

September 29, 2008

If the bill becomes law, supporters said it would lead to new deals being crafted that could keep Web radio stations on the air.

"H.R. 7084, the Webcaster Settlement Act of 2008, authorizes SoundExchange, on behalf of copyright owners and performers, to negotiate an alternative royalty agreement before the end of the year with any Internet radio service," according to the SaveNetRadio coalition. "This legislation will benefit all webcasters, including NPR, college webcasters, small webcasters and broadcasters who put their stations on the Internet."

Internet radio station operators such as Pandora have been struggling with new royalty rate structures that would force them to pay consecutively higher royalty payments to artists through 2011.

The new structure, created by the U.S. Copyright Royalty Board (CRB) and crafted largely at the behest of SoundExchange, the recording industry's lobbying arm, was widely criticized as potentially forcing many Web radio broadcasters out of business.

Under the new legislation, the deadline for negotiations between the various players would be extended to February 15, 2009. Congressional authority is required to broker a compromise on licensing agreements for Internet radio, since it authorizes the licenses.

"There may now be a light at the end of the tunnel in the fight over Internet radio royalties," said bill sponsor Jay Inslee (D-WA). "Uncle Sam will not get in the way," Inslee said.

Inslee was a co-sponsor of previous legislation that would overturn the CRB's decision and open the floor for negotiations between Web radio broadcasters and the recording industry to change the rate structure. Although the bill and companion legislation in the Senate gained bipartisan support, the legislation was never passed into law.

Pandora founder Tim Westergren published a "call to arms" on his blog urging supporters to call Congress asking them to pass the legislation, and to prevent opposition from "terrestrial" radio organizations such as the National Association of Broadcasters (NAB). After the bill passed the House, the NAB said it would not interfere with passage of the legislation in the Senate.

"This is a fork in the road," Westergren said. "Only massive grassroots opposition will keep us from another 50 years of top 40 radio. It's time to take a stand and break the stranglehold of broadcast media on radio."

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