In June, Librarian of Congress set the royalty rates for webacsting industry, based on the original instructions from the Congress on how to deal with the issue. The results weren't good for webcasters -- royalty rates were set to be fixed fees based on the listeners and numbers of songs played. Fees also were applied retroactively, beginning from 1998. After the decision, several dozens of small webcasters told that the fees were higher than their annual revenues and shut their services down.
What's amazing, is the fact that handful of small webcasters united and presented their case to Congress and actually got their momentum and backing from several Reps. Rep. James Sensenbrenner (R-Wi) introduced a bill that would have postponed the payments for another six months in order to push both sides -- RIAA and webcasters -- to negotiate a new deal. Yesterday the negotiations finally got the breakthrough and new royalty rates were approved today by House.
Under the new licensing terms, small webcasters whose revenues are less than $250,000, will pay appx. 10 percent of their revenue or 7 percent of their expenses, in licensing fees to RIAA. Whichever figure is higher, that will be used. Also medium-sized webcasters, whose revenue is between $250,000 and $500,000 a year, pay based on their revenue -- 12 percent of their revenue or 7 percent of expenses (again, whichever figure is higher, it will be used). Big webcasters will use the old fixed fee contract.
Also, the retroactive fees will be only 8 percent of company's revenue or 5 percent of company's expenses, dating from 1998. The qualifying level for a "small webcaster" category will also be raised to $1M in annual revenue in 2004. Contract will be valid until the end of 2004 when new negotiations will take place.
"You have to stop and remember that without exception, the most political thing any of us had ever done before was vote," one of the webcasters who were part of the pressure on Congress said. Pretty amazing still, Internet actually DOES have power :-) Deal will still have to be approved by the Senate.
Source: News.com
Written by: Petteri Pyyny @ 7 Oct 2002 16:50
