Congress Spares Internet Radio After NAB Relents On Royalty Rate Law; Senate Next

This story was written by Joseph Weisenthal.
File this under: Things Congress does when it's not trying to stave off the next Great Depression. While Congressmen busily worked to construct a mammoth Wall Street bailout (they worked on the weekend, and even past midnight!), the House managed to pass (by voice vote) The Webcaster Settlement Act, a bill giving internet radio stations leeway in negotiating royalty rates. CNET explains how the alternative was for internet broadcasters to pay a congressionally-mandated rateone deemed onerous and deadly by those in the industry. Pandora founder Tim Westergren probably banged the drum the loudest on this one, warning that the new rates meant certain death for his popular site. (Note: It's still not clear how Pandora will thrive and survive, even with lower rates, but this certainly buys them some time.)

Although the NAB originally opposed the law, the lesson here underlines how much clout the traditional media group still has. As CNET explains, the bill was only able to pass once the industry trade group dropped its opposition: "The real deciding factor came when Rep. Howard Berman (D-Calif.) met with members of the NAB. They told him that they feared their Web competitors would get a deal done first. Under the terms of the legislation, SoundExchange, the body that collects royalties and is part of the Recording Industry Association of America, has until Dec. 15 to negotiate a new rate. The NAB apparently was worried that the deadline didn't give the organization enough time to strike its own royalty agreement. "Berman said 'Fine, we'll extend the date until Feb. 15, which gives you two more months to talk,'" said one music-industry source with knowledge of the discussions. "There isn't anything in the act that prevents traditional broadcasters from reaching their own royalty rate." That did the trick, according to the source. "

The bill's passage comes about a week after certain other royalty rates, such as those governing on-demand streaming, were settled by various industry parties. A Senate vote is expected today or early this week.


By Joseph Weisenthal
  • CBSNews

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