Senate puts Webcasting bill on hold

Small Webcasters, many of which have said they will shut down rather than start paying new royalty fees that come due this weekend, had pressed for the passage of the bill as a last-ditch effort to stay in business. Negotiations earlier this month had won the support of the Recording Industry Association of America (RIAA) for the measure.

However, a last-minute hold anonymously placed on the bill by a single senator prevented the Senate from voting on the issue before adjourning Thursday night. Sources close to the issue say the senator was Jesse Helms, R-N.C., acting in part on concerns expressed by traditional broadcasters.

"Jesse Helms killed Internet radio," said Michael Roe, manager of RadioIO.com, and one of the leading figures in the group of Webcasters who had helped negotiate the bill. "Pending some private deal (between the RIAA and Webcasters) materializing between now and Sunday, RadioIO will go dark."

The bill still can be taken up in November after the Senate reconvenes, providing some measure of hope to Webcasters. However, as the law stands today, all Internet radio companies will be required beginning Sunday to pay royalty fees amounting to about one-fourteenth of a cent per song streamed to each individual person. The fees are retroactive to 1998, which means that huge bills will be presented to some popular stations.

The record industry trade association had argued consistently that the rate, set by the Copyright Office and the Librarian of Congress, was too low. However, the group had agreed in the course of the bill's negotiations to let small businesses pay between 8 percent and 12 percent of revenue instead of the flat fee.

The RIAA said it was disappointed that the bill had not been taken up as expected.

"We hope that the Senate will work this out quickly," said RIAA Chief Executive Officer Hilary Rosen. "All parties who support this legislation should contact their senators to urge passage of this bill."

An RIAA spokeswoman declined to comment on whether the group was willing to discuss any "private deal" that would let small Webcasters avoid the Oct. 20 deadline without legislation.

According to a spokesman for Sen. Patrick Leahy, D-Vt., negotiations in the Senate over the last week had succeeded in winning most members' support. The bill was expected to pass on Thursday without significant opposition, so the last-minute hold--apparently by Helms--came as a surprise.

Capitol Hill sources said Helms was concerned by the objections of traditional broadcasters, most of which would not be covered by the bill's provisions. Over-the-air radio stations are seeking a court ruling that would exempt them from the new royalty fees when they play their programming on the Internet. However, both the U.S. Copyright Office and the courts have said that broadcasters must pay the fees.

A representative for Helms could not immediately be reached for comment.