Sources close to the negotiations among labels, artists, and Webcasters say the major part of a deal was struck yesterday morning (Oct. 6) that would offer smaller Webcasters -- those making under $1

Sources close to the negotiations among labels, artists, and Webcasters say the major part of a deal was struck yesterday morning (Oct. 6) that would offer smaller Webcasters -- those making under $1 million a year -- significant discounts, both prospectively and retroactively, in royalty fees that they must pay to the labels and artists. Webcasters contend they will go out of business if they have to pay the full rates.

However, problems remain. Artist groups tell Billboard Bulletin that they are pleased by the parts of the deal that would affect smaller Webcasters, but are concerned about language that may imperil mandated direct payment of royalties to artists.

The deal, if fully resolved, will be offered as fast-track legislation in the remaining days of the Congressional session. The chairman of the House Judiciary Committee, F. James Sensenbrenner (R-Wisc.), had given the groups until last Friday to reach an agreement. Otherwise, he said, he would reinstate a bill to put off payment of Webcaster royalties for six months, to allow challenges to the rates to be heard in court. Sources say Sensenbrenner will probably cut the negotiators some slack because they are so close to an agreement.

The royalty rate of 0.07 cents per performance for Internet-only transmissions and simulcast retransmissions -- announced by the Librarian of Congress in July -- and the Copyright Arbitration Royalty Panel that helped establish them are at the center of legal actions by Webcasters, lawmakers, and the Recording Industry Association of America.

Last month, a report from Jupiter Research indicated that most Webcasters would go bankrupt paying the performance royalties. The report said Webcasters lack viable revenue sources to offset the fees, despite an upward trend in the number of listeners.