Librarian of Congress Rejects Net Royalty Proposal

Librarian of Congress James H. Billington issued an order yesterday rejecting an arbitration panel's proposed royalty rates for music delivered online.

A statement on the U.S. Copyright Office's Web site at gave no explanation for the decision but said a final decision will be issued by June 20.

On Feb. 20, as part of the 1998 Digital Millennium Copyright Act, a three-member arbitration panel recommended that Internet broadcasters pay fees to song copyright holders based on the number of people listening to their Webcasts. The proposed rates ranged from 0.07 cents to 0.14 cents per song per person for commercial Webcasters and 0.02 cents to 0.14 cents for non-commercial Webcasters.

The recording industry wants higher rates. Webcasters want lower ones. The panel reached its decision after hearing six months of testimony from Webcasters, broadcasters and copyright owners, including artists and performers.

Earlier this month, hundreds of Webcasters joined in a “Day of Silence” in protest of the royalties that small operators claim would put them out of business.

What Billington's order means for either side is unknown.

When the DMCA was passed, it was understood that Webcasters could broadcast without paying royalties until they were determined, and then they would be retroactive to when they started Webcasting.

Critics of the royalties say that the Internet is an outlet for college and community stations, but that they will be crushed by the royalties as proposed, leaving just a few Top 40 stations.

Some small Webcasters have reportedly begun shutting down already in fear of retroactive royalties.

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