College radio broadcasters reacted with guarded optimism about the Librarian of Congress’ rejection last week of proposed fees stations would pay for playing music online.
By rejecting the rules proposed by the Copyright Arbitration Royalty Panel, Librarian of Congress James H. Billington has until June 20 to determine how much the streaming fees should be. His decision set up a showdown between Internet radio broadcasters and musicians over how much royalty fees are owed to musicians when their songs are played over the Internet.
“It is time that (Webcasters)
finally start to pay the artists and record companies whose creative output is the most important component of their business,” John L. Simson, executive director of the recording industry’s lobbying group for Internet issues Sound
Exchange, said in a statement.
Journalism professor Al Stavitsky sees the fight over the proposed rules as part of a larger debate regarding artists and other content producers working in new media, such as the Internet. Musicians are closely watching this debate, he said, because they believe the new rule system will fix shortcomings in the traditional broadcast royalty fee structure. Presently, radio stations pay royalty fees to record companies and composers of each song. Stavitsky pointed out that artists who write their own material are compensated for their work. However, singers who cover other people’s material are not compensated when their songs are played on the radio.

Local reaction
KWVA General Manager Charlotte Nisser joined a growing chorus of college radio broadcasters in complaining the fees were too restrictive and unfairly hit small, educational radio stations that broadcast on the Internet. Had the fees gone through, she said, KWVA would have been forced to pay an estimated $3,700 more per year in royalty fees to record companies and musicians.
KWVA and KPSU at Portland State University decided they will continue to broadcast on the Internet until Billington reaches
a decision.
“Until we get a cease and desist order, we’ve been told to keep streaming,” said David Jimenez, KPSU station manager.
“They’re braver than we are,” said Ann Robinson, assistant director of student media at Oregon State University’s station KBVR. Robinson said the station is ready to begin streaming, but won’t begin until the legal issues surrounding royalties are cleared up. By staying off the Internet, KBVR joined a growing list of college radio stations that have pulled the plug on streaming out of fear the royalty fees could be too high to pay.
Billington did not give any reasons for his ruling. While most college broadcasters are optimistic, no one is certain if he felt the fees were too restrictive for radio stations.
Part of the proposed rules Billington rejected were:
* Each station broadcasting on the Internet must pay $500 each year to the recording industry.
* Noncommercial radio stations that broadcast on the Internet would have paid two-hundredths of a cent for every online listener per song.
* Commercial radio stations that broadcast on the Internet would have paid seven-hundredths of a cent for every online listener per song.
* Stations would have been forced to keep strict records of each song played on the Internet.
Nathan Cox, KWVA’s chief engineer, said that the rules would have unfairly hit small, independent radio stations. The main problem, he said, was the committee treated all noncommercial radio stations as equals. This is almost unheard of in other negotiations with artists’ organizations such as ASCAP and BMI, which take transmitter size and audience size into account when deciding on-air royalty fees. Because KWVA has a smaller transmitter and audience than say, local radio station KLCC, the University station pays less in royalties to these companies. However, on the Internet, both stations would have been equals.

Online issues
The high costs of streaming on the Internet is another issue. KWVA, like other streaming stations, must pay for equipment and a site license to RealAudio, their streaming provider. Currently, only 50 people can listen to the station on the Internet at one time. KPSU has only enough equipment to provide 30 online listeners, even though the station broadcasts 5 p.m. to 2 a.m. during the week, and noon to 2 a.m. on weekends. When KBVR does go online, they will have capabilities for 20 listeners.
With so few listeners on the Web and such a small market share, many college stations asked if it was worth it for the recording industry to charge them the same fees as stations with many more online listeners.
“How many people are really going to listen to us on the Web? Parents of DJs, former DJs and some people who happen upon us,” Robinson of KBVR said.

Promises unfulfilled
College broadcasters are continuing to lobby Congress and Billington on the rules. Some radio organizations have already reached deals with the recording industry regarding Internet royalties. National Public Radio reached a deal for all 470 of public radio member stations, though they would not disclose terms of the deal. Robinson of KBVR said she has been told by Collegiate Broadcasters, Inc., an organization KBVR belongs to, that they are also trying to negotiate a deal. Jimenez said the Intercollegiate Broadcasting System is also attempting to work out an agreement.
Record companies are also closely watching the debate because they are hard-pressed to keep a high profit margin during a period of declining record sales. They blame much of that decline on music swapping sites made popular by Napster, and the ability to easily copy music discs on home computers.
Stavitsky also pointed out that the promise of making large sums of money on the Internet has yet to bear fruit. He sees this debate as record companies trying to jockey for the future.
“Very few people are making money off the Web,” he said. “But you have to keep doing it because someday somebody will.”