A bill introduced in Congress Thursday aims to overturn a controversial royalty fee increase that Internet radio advocates say threatens to cripple their services.
The "Internet Radio Equality Act," introduced by Reps. Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.), would invalidate a March 2 decision by the U.S. Copyright Royalty Board that calls for raising royalty rates paid by Net radio operators.
"You can't put an economic chokehold on this emerging force of democracy," Inslee said in a statement e-mailed by a spokeswoman. "There has to be a business model that allows creative Webcasters to thrive and the existing rule removes all the oxygen from this space."
The bill's introduction comes less than two weeks after the CRB declined to reconsider most of its decision. Small Webcasters, National Public Radio, Clear Channel Communications and others had filed petitions for a rehearing. Some have indicated they are considering filing an appeal of the rules in court.
If it were to stand, the CRB's existing ruling (PDF) would result in fee increases on Internet radio operators ranging from 300 to 1,200 percent between 2006 and 2012, according to a group called SaveNetRadio, which has been lobbying Congress for relief.
Specifically, the rules call for rate increases of .08 cents per song per listener retroactive to 2006. They would also climb to .19 cents per song by 2010, which amounts to a 30 percent increase per year. Each station would also have to hand over a minimum $500 royalty payment under the ruling.
The congressmen said they had already received more than 1,000 e-mails and letters opposing the decision.
In addition to repealing that regime, the new House bill offers a compromise: It would set the rate at 7.5 percent of the Webcaster's revenue "directly related to" its transmission of sound recordings, or 33 cents per hour of sound recordings transmitted to a single listener. It would be up to the Webcaster to decide which model to use. That rate would also apply to satellite and cable radio operators, Inslee's office said in a statement.
The proposal drew applause from SaveNetRadio, whose members include Internet radio listeners, Webcasters and artists.
"This bill is a critical step to preserve this vibrant and growing medium, and to develop a truly level playing field where Webcasters can compete with satellite radio," said organization spokesman Jake Ward.
The bill also calls for public radio broadcasters to submit a report to Congress on how to determine rates for their class of services. Andi Sporkin, NPR's vice president of communications, called that idea a fair solution that is consistent with more than 30 years of copyright law, which "has recognized that public radio has a very different mission from commercial media and cannot pay commercial-level royalty rates."
Representatives for SoundExchange, the nonprofit entity that collects the fees and lobbied for the royalty rate changes, said they were still reviewing the bill and had no comment on Thursday.
The organization in the past has defended the CRB's decision as an appropriate way of ensuring artists are adequately compensated when their work is broadcast over the Internet.
Internet radio broadcasters may find a savior in a recent proposition in the US Congress. The recently proposed Internet Radio Equality Act, introduced by representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL), would strive to revert the drastic changes applied to Internet radio royalties by the Copyright Royalty Board (CRB) that will go into effect on May 15, 2007, and retroactive since January 1, 2006. The proposition aligns Internet broadcasting fees to be more inline with those of satellite radio, for a flat fee of 7.5% of the broadcaster's revenue, rather than the CRB rules of .08 (2006) to .19 (2010) cents per song for private broadcasters, or $500 per month for public broadcasters if below a specific number of listening hours.

According to Inslee, the fees that would go into effect on May 15 would be a chokehold on democracy, and claimed in a statement that webmasters need a functioning business model.

A common fear among Internet broadcasters is that they will have to file for bankruptcy once the fees of the CRB will go into effect. ''"Over 90% of internet radio will simply be gone. The net result will be a huge loss of diversity, a huge loss for music artists and a loss of virtually all of the internet radio that exists,"'' claimed Joe Kennedy, CEO of Pandora.

SoundExchange, supportive of the CRB rules and a major collector of artist royalties from radio stations, has claimed the new fees are necessary to pay the artists that deserve it.