Internet radio gets a break on royalties

Internet radio gets a break on royalties

	Published : Wed, 02 May 2007 22:22 By : Agencies Print this Story

NEW YORK (AP) - Internet radio broadcasters caught a break in their struggle against higher music royalties as a deadline for paying fees under the new system was postponed by two months, to July 15.

According to the final ruling of the Copyright Royalty Board, a panel of three judges that determined the new rates, the first fees are no longer due on May 15, something that many smaller Internet radio companies said would force them out of business.

The delay was disclosed on Tuesday when the board's decision was officially published in the Federal Register, according to David Oxenford, a lawyer representing many of the Webcasters. That also started a 30-day clock within which Webcasters can file a notice to appeal the decision in federal court, something they have said they plan to do.

The royalty board came up with the new fee structure in March after the Webcasters, which include several small companies but also major Internet companies like Yahoo Inc., Microsoft Corp.'s MSN site, commercial radio stations and AOL, a unit of Time Warner Inc., failed to reach agreement with the owners of music copyrights on a new royalty system after a previous set of agreements expired in 2005.

The royalties apply only to digital broadcasts of music, and are paid to the artists and record labels. Satellite radio broadcasts are also digital and are subject to similar royalties.

Those royalties are paid on top of other fees paid to the publishers and composers of music, which are also paid by traditional radio stations. Those stations don't pay the digital broadcast fee as airplay is considered to be a form of promotion for record sales.

SoundExchange, a group that collects and distributes digital music royalties on behalf of copyright holders, has said it wants to see the Internet radio business thrive, and disputes claims from the broadcasters that the new fees are onerous.

However John Blackledge, an industry analyst at JPMorgan, said in a report last months that the newly issued royalties could 'potentially shutter smaller Internet radio companies' and hurt the profitability of larger operators as well.