Webcasters' Fates Still Uncertain

With Fee Deadline Past, Many Stations Remain Online

Sunday was the deadline for Internet radio stations to pay higher fees set by a federal agency, but the debate over when and how much they will pay has not been decided.

As evidence of that, some of the stations that said they would have to shut down because of the higher costs remained online yesterday.

The battle began in March, when the Copyright Royalty Board, part of the Library of Congress, decided to more than double royalty rates paid by Web-radio operators by 2010 and impose an annual $500 fee per channel.

Such fees were endorsed by SoundExchange, a group representing the recording industry but vocally opposed by thousands of webcasters, who said the higher costs would force them out of business.

As the deadline approached and webcasters lost hope of immediate court or congressional intervention on their behalf, a trade organization representing the Web radio operators said it struck a last-minute deal with SoundExchange to cap the per-channel fee at $50,000.

According to the Digital Media Association, the deal would require webcasters to report the names of the artists whose music they play and adopt technology to limit the copying of broadcasts, but would also allow larger operators with thousands of channels to stay in business.

As of yesterday, SoundExchange said it had not formally approved the deal.

The disputed status of the deal had some Internet radio operators claiming that negotiations were tantamount to a reprieve on the deadline.

SoundExchange denied that assertion and said nonpaying webcasters would be charged retroactively with interest, said Richard Ades, a spokesman for the group.

"It's not clear what the right thing to do is," said Tim Westergren, founder of Pandora, one of the largest Internet radio providers, which was online yesterday. "Each webcaster is treating the situation differently."

The decision of the Copyright Royalty Board is law, so any negotiation or compromise approved by the industry groups would require approval from Congress.

There are bills in the House and Senate that would reduce the amount webcasters would pay. Another House bill would delay the payment of the fees.

For some, the whole confusing fight has made technologists throw their hands up at the way things are done in Washington.

"I just want to get back to helping webcasters get business and figuring out how get more ad revenue," said Johnie Floater, general manager of media at Live365. "We've been spending all of our time playing lawyers and lobbyists."