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Senators want to overthrow new Net radio fees

Similar to a bill already introduced in the House of Representatives, new effort would nullify contentious decision to raise Webcaster royalty rates.

Congressional momentum appears to be building in support of overturning a contentious ruling that Webcasters argue could cripple their services.

On Thursday, U.S. Sens. Ron Wyden (D-Ore.) and Sam Brownback (R-Kansas) introduced a bill that would repeal a U.S. Copyright Royalty Board decision scheduled to take effect July 15. The rules would raise the rate per song and per listener retroactively to 2006, and then in each year until 2010. It would also require each Internet radio "channel" to make a $500 minimum payment.

Opponents of the new rules, which include large and small commercial Internet radio companies, National Public Radio, and other public broadcasters, say the decision would lift the existing required rates by 300 to 1,200 percent, potentially putting some operators out of business. They have been lobbying Congress for relief, and some have indicated court challenges are also imminent.

SoundExchange, the non-profit entity that collects the fees on behalf of the record industry, has continually defended the changes as fair and necessary to provide adequate compensation to artists.

Called the Internet Radio Equality Act, the Senate measure is similar to a House of Representatives bill introduced in late April by Reps. Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.).

Like that bill, the Senate version would place Internet radio services on the same level as satellite radio services, which are currently required to pay royalties equivalent to 7.5 percent of their revenue. It also proposes a method for calculating royalties required of non-profit broadcasting entities like NPR, including limiting their required payments to no more than $5,000 per year--unlike the House bill, which calls for a report to Congress on public broadcaster obligations.

The senators said they feared that without congressional action, Internet radio--in particular, smaller Webcasters with limited revenue streams, Brownback said--will not be able to flourish.

"Keeping Internet radio alive is part of a broader issue that is important to me--keeping the e-commerce engine running by preventing discrimination against it," Wyden said in a statement.