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Webcaster and RIAA Battle over Compulsory Fee

Webcasters, represented by the Digital Media Association (DiMA), and the Recording Industry Association of America (RIAA) submitted proposals to the US Copyright Office on Wednesday regarding the rate of the compulsory fee required by the Digital Millennium Copyright Act (DMCA).

The Digital Millennium Copyright Act (DMCA) requires webcasters to pay a compulsory fee for performance royalties above and beyond the fees that are currently being paid by over-the-air broadcasts. The rate of that fee has yet to be determined. The submissions this week precede the hearings, during which the U.S. Copyright Office will officially determine the rate. The hearings are set to begin in July, but it could be as late as January 2002 before a rate is set. The fee, once determined, will be paid for all streams back dated to October 1998.

Not surprisingly, the two sides presented very different rate levels, with the RIAA suggesting a rate that was 28 times greater than DiMA's proposal according to Reuters.

The RIAA proposed that webcasters should pay a performance royalty of four-tenths of one cent for each song streamed. DiMA's proposal reportedly worked out to about .0015 dollars per listening hour.

This copyright battle should not be confused with the legal woes of Napster. The rate in question is for non-interactive streaming services only. Downloadable music is subject to other rates and fees that must be worked out with the labels on an individual basis.

A spokesperson for MusicMatch.com, a music service site that is represented by DiMA, indicated that the disparate proposals were not a cause for concern. These are the first numbers brought to the table and it is hoped they would reach a reasonable middle ground.

Old School Radio Not Weighing In

While traditional broadcasters are exempt from this fee in terrestrial broadcasts, the U.S. Copyright Office determined that they were NOT exempt when transferring their signal over the Web. NAB is fighting this finding in a pending court case, stating that congress never intended for broadcasters to be subject to this fee. NAB's argument questions the validity of subjecting the same signal to different fees simply because it is traveling down a different pipe.

Most radio stations are not making money off their streaming services or have only recently begun to turn a profit, and are reluctant to continue in the face of additional fees. In fact, several major radio stations, including those owned by Clear Channel, pulled their streaming services when concern regarding advertising fees was added on top of the compulsory fee discussions.

Webcasters were hoping that the NAB would throw their weight in on the side of DiMA in setting the fee, but NAB has chosen to keep quiet in the current deliberations. A spokesperson for the NAB stated that it might be misinterpreted as accepting the U.S. Copyright Office's decision if they were to make a proposal on the fee.

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