Internet music broadcasters and the record industry agreed to settle their long-running dispute over how much big Webcasters must pay to broadcast songs over the Internet.
The deal reached Thursday calls for Webcasters including Yahoo, America Online, Microsoft and RealNetworks to pay slightly lower per-song royalty fees than those imposed last year by the US Copyright Office, which still must sign off on the agreement.
Internet radio -- either simulcasts of traditional over-the-air radio or Internet-only stations streamed over the Internet to computers -- is becoming more popular as people get high-speed connections.
The record industry has been pressing to collect royalties to pay artists and music labels for use of their songs.
"Musicians in all styles of music and at every level of popular success deserve fair compensation for their hard work and talent," said Thomas Lee, president of the American Federation of Musicians. "We are delighted to have reached an agreement."
A 1998 law required that organizations broadcasting music and other radio content over the Internet pay fees to record companies that hold song copyrights.
After the two sides were unable agree on rates on their own, the Copyright Office ruled in June that webcasters must pay about 70 cents for every song heard by 1,000 listeners as counted by the Webcasters.
The larger Webcasters complained the rates, which they paid retroactively back to 1998, cost them hundreds of thousands of dollars for each year, more than some of them get from advertising or listener contributions.
The Copyright Office was to begin another arbitration between the parties next month to work out royalty payments for this year and next year. The new deal, if approved, will make that process unnecessary.
Jonathan Potter, executive director of the Digital Media Association, which represents webcasters, said the agreement will save his industry millions of dollars in legal fees that would be needed if the Copyright Office arbitrated the agreement. He said webcasters can now put resources toward "high-quality programming that is enjoyed by millions of listeners.''
The agreement proposes a per-song rate similar to that set by the government last year, but allows 4 percent of a webcasters' songs to be free from royalties. The proposal also gives Webcasters the option of paying royalties as a percentage of their revenue or at an hourly rate.
Potter said those choices will allow webcasters to save money by picking the method that works best for them.
The new proposal does not apply to Internet simulcasts of traditional over-the-air radio or to noncommercial webcasters such as college radio stations.
Small webcasters -- typically operations that are listener-supported and reach, at most, just a few thousand people -- had complained the Copyright Office rates would force them out of business. Legislation passed last year allowed them to pay less.
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