In an unexpected development, Rep. F. James Sensenbrenner Jr. (R-Wisc.) introduced legislation late yesterday (Sept. 27) that would delay for six months Webcasters' payments of digital royalties to re

In an unexpected development, Rep. F. James Sensenbrenner Jr. (R-Wisc.) introduced legislation late yesterday (Sept. 27) that would delay for six months Webcasters' payments of digital royalties to record companies and artists. Webcasters are supposed to begin paying the royalties on Oct. 20. Insiders say Sensenbrenner, chairman of the House Judiciary Committee, wants to suspend payments until pending court challenges to the new rates are heard.

Sources say the new bill might be taken to the floor of the House as early as Tuesday. More details are expected today.

"This is a surprising development, considering how productive our discussions with the Webcasters have been," says a Recording Industry Association of America (RIAA) spokesperson. In recent weeks, small Webcasters have been in discussions with SoundExchange, the label/artist collection unit, over modified, lower rates.

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 RIAA.

Earlier this 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. It said that unless the majority of labels waive the fees, and a central rights clearinghouse is established so Webcasters can secure rights more efficiently, most surviving Web radio stations would be broadcasting sports or talk shows within two years.

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