Webcasters optimistic about new royalty act

Considering all the major financial legislation that has been making news recently, it might have been easy to overlook the Webcaster Settlement Act of 2008, which was passed by both the House and Senate within the past two weeks. But for webcasters looking to continue their Internet-based broadcasts, the act may mean that their medium has a future.

The act, which is expected to be signed into law by President Bush, allows webcasters to continue to negotiate royalty rates for recorded music on a case-by-case basis with SoundExchange, the organization that collects performance royalties for artists and record companies. These negotiations can be held through Feb. 15 and can result in agreements that will be retroactive to 2005 and last as long as 11 years.

Although that doesn't sound like much, it is a major reprieve for webcasters, many of whom had felt they could not continue webcasting - or providing Internet radio streams - after the US Copyright Royalty Board decision of March 2007. That decision set standard royalty rates that most webcasters found ruinous.

While copyright holders seek payment for the use of their material by webcasters, webcasters argue that they provide a valuable service to the copyright holders by publicizing the work of artists and record labels, and that the value of this exposure should be taken into consideration when setting fees.

In addition, say proponents, because webcasting is such a new medium, it does not yet have established sources of advertising or other income and is particularly vulnerable to economic pressure.

Speaking during a conference call on Monday, Tim Westergren, chief strategy officer and founder of the Pandora online music service, explained that traditional radio royalties tend to be "4 or 5 percent of revenue." He then said that the rates set by the Copyright Royalty Board last year "can be 70 or 100 or 200 percent of [station] revenue."

Royalty rates for the new medium have been under discussion since first being set by the Digital Millennium Copyright Act of 1998, including a series of agreements that at one point had capped fees and allowed lower rates for small and nonprofit webcasters, restrictions that had been done away with in the 2007 decision.

The new act, Westergren said, will allow webcasters to "ask for a royalty rate that's in the ballpark of common sense."

The aim of the act is to "allow for the survival of webcasting," said its author, US Representative Jay Inslee (D-Wash.), of the Energy and Commerce Committee, in a statement. "I encourage the two sides to continue their negotiations and I look forward to seeing a final settlement," continued Inslee. "We in Congress will continue working to ensure Internet radio's survival and the prosperity of independent webcasters."

Local webcasters are cautiously optimistic about the act. Some, like Tessil J. Collins, owner of the Dorchester-based Sun-Music.net, sees the reopening of negotiations as "the best opportunity for webcasters of all sizes to compete and succeed." But Martin Kay, CEO of Boston's FineTune.com, views the act as simply a first step.

"The proposed legislation doesn't really address the primary concern, which is high Internet radio royalty rates," says Kay. "It provides a mechanism for settlements to go into effect but doesn't really help with achieving those settlements."

Spinning the dial
On Oct. 24, Barry Scott, host of "Lost 45s," which airs Sundays from 7 to 11 p.m., will host a benefit for the Gay and Lesbian Anti-Violence Project at Club Cafe (209 Columbus Ave.) in the South End. The 6-9 p.m. dance party will feature Charlene, singer of "(I've Been to Paradise But) I've Never Been to Me." For tickets and information, call 617-536-0966 or www.clubcafe.com.