The U.S. Senate, in the final hours of the 107th. Congress last night (Oct. 17), failed to pass a bill supported by record companies and artists groups that would have given small-company Webcasters m

The U.S. Senate, in the final hours of the 107th. Congress last night (Oct. 17), failed to pass a bill supported by record companies and artists groups that would have given small-company Webcasters making less than $1 million a year a break on digital performance royalties that are due on Sunday.

As such, the bill is in limbo until the Senate returns after the November elections for possible reconsideration, and small Webcasters will have to pay higher fees retroactive to 1998 based on the rate set in June by the Librarian of Congress. That amounts to 70 cents per song per 1,000 listeners, a fee that many say will drive them out of business.

Insiders say that Sen. Dianne Feinstein (D-Calif.) put a hold on the bill on Wednesday because of apparent concerns for recording artists. The Recording Industry Association of America (RIAA) and artists groups convinced her to release the hold by early yesterday afternoon. Industry lobbyists were confident that the legislation had achieved fast-track status, but sources on Capitol Hill say another senator put an 11th hour hold on the bill.

Said an RIAA spokesman: "We are surprised and disappointed that the small Webcasters legislation was not passed as expected. We hope that the Senate will work this out quickly. All parties who support this legislation should contract their senators to urge passage."

The bill has had a rocky road in the Senate after unanimous vote in the House Oct. 7. The legislation missed floor action earlier this week because of objections from the National Association of Broadcasters and others.