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Net radio bill blasted by royalty collectors

SoundExchange, the non-profit entity that collects royalty payments on behalf of musicians, opposes a new congressional effort to overturn fee increases.

A congressional push to overturn controversial increases in fees for Internet radio operators came under attack on Friday by SoundExchange, the organization that collects royalty payments on behalf of musicians.

SoundExchange has been among the chief forces that successfully persuaded the U.S. Copyright Royalty Board to elevate the fees required of Webcasters over the next few years by anywhere from 300 to 1200 percent, according to the rules' opponents. The CRB this month has already declined to reconsider most of its March 2 decision after reviewing petitions submitted by National Public Radio, Clear Channel Communications, groups representing smaller commercial Webcasters and others.

But a bill introduced on Thursday by Reps. Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.) would invalidate that ruling and instead require all Internet, satellite and cable radio operators, along with Internet-based jukeboxes and other similar services, to pay 7.5 percent of their revenue "directly related to" transmission of sound recordings.

In a press release on Friday (PDF), SoundExchange attacked the bill as a blow to the "fair market rates" set by the CRB. The group claimed the bill would require musicians to pay back more than $50 million to "mega-corporate Webcasters" like AOL, Yahoo, Microsoft and Clear Channel because of retroactive language in the bill.

An Inslee aide told CNET that he was puzzled by that number and suggested the group may have misread the bill.

SoundExchange also said there was no reason to believe that the CRB's new rules are unfair, despite claims from Webcasters that the changes will drive them out of business. Despite a growth in Internet radio services over the years, musicians each only collected an average of $360 from Webcasting in 2006, and small Webcasters only accounted for about 2 percent of all royalty payments during that time, the organization said.

SoundExchange has already been trying on its own to make peace with opponents of the new rates. It issued a statement last week announcing it was "reaching out to Webcasters" in hopes of "reaching mutually beneficial arrangements" designed to ensure Internet radio continues to grow and artists are fairly compensated.