Webcasters ask court for new royalty date

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WASHINGTON -- Webcasters are asking a federal court Thursday to suspend the so-called "true up" date when they would have to pay copyright holders a new, higher royalty payment for digitally-delivered music.

The Digital Media Assn., which represents webcasters, NPR and a group of small, commercial webcasters asked the U.S. Court of Appeals for the D.C. Circuit to suspend the July 15 date that would require them to pay what they owe from the a substantially higher royalty they Copyright Royalty Board decided should be paid.

DiMA executive director Jonathan Potter said the emergency stay was necessary to keep many webcasters in business.

"A July 15 shutdown of Internet radio services would cause these companies, consumers and artists irreparable harm, and the CRB decision so obviously needs the court's scrutiny," Potter said after DiMA and others told the court they would ask for the stay. "While our appeal moves through the legal process, we implore the Court to grant a stay and prevent unnecessary industry carnage."

While Potter forecast gloom and doom, SoundExchange -- the nonprofit organization that collects digital royalties -- offered to ease the pain the new royalty would cause when it offered last week to let webcasters with royalties under $1.5 million a year to pay the old rate.

On March 2, the CRB ruled that webcasters must pay each time a listener hears a song, at a rate that began at 0.08 cent in 2006, and rises to 0.19 cent in 2010. Besides increasing the charge for each song, the ruling established a $500 minimum payment for each Web channel.

Internet radio royalties have become a thorny issue in part because conventional over-the-air stations pay nothing to use recordings. Both online and regular stations pay royalties to songwriters, but under a 1995 law, companies transmitting music using the Internet, cable or satellite must pay both the songwriter and for the performance. The money is split between the owner of the recording, usually the label, and the performers.

Until the end of 2005, Internet stations could pay royalties based on either the number of songs they played or the number of hours listeners tuned in, and small companies had the option of giving SoundExchange about 12% of their revenue. That changed with the CRB's ruling.
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