WEBCASTERS SUE RIAA

As if the record industry didn’t have enough on its hands, now they are being sued by an organization of small webcasters who say the RIAA tried to price it out of existence, according to numerous published reports.

The Webcaster Alliance has been threatening to sue the record companies for months, after Congress ratified royalty rates for Internet radio stations that many small operators claim will drive them out of business.

The alliance claims the current rates,negotiated between a group of webcasterswho didn’t properly represent the majority and the RIAA, were aimed at eliminating competition.

"We have watched the RIAA's actions [which] have the effect of wiping out an entire industry of independent Webcasters who represent freedom of choice and diversity for Internet radio listeners," claimed Webcaster Alliance President Ann Gabriel, in a statement. "It is time for the RIAA to be held accountable for years of manipulating an entire industry in order to stifle the growth of independent music and control Internet content and distribution channels."

Webcasting royalty rates have been at the heart of some serious controversy since Internet radio stations began popping up in the mid-‘90s. Congress passed updated copyright rules in 1998 that created a new royalty structure unique to the Web, outlining the fees these online stations would pay record labels and artists for playing their music. Lawmakers didn't specify how much this fee would be, kicking off years of battles.

In June 2002, the Library of Congress set the rate at about 0.07 of a cent per song, with the fees retroactive to 1998. Small companies claimed the rate would put them out of business. Congress stepped in and passed a bill that’s aimed to protect those smaller stations.

No set amount was specified by Congress, either, though it ratified negotiations between a group called the Voice of Webcasters and the RIAA, which set royalty rates at a percentage of revenue instead of a flat fee per song. Larger companies such as America Online and Yahoo were still covered through the .07 cents a song set by the Library of Congress.

The Webcaster Alliance alleges that the plan was part of a strategy to wipe out the entire independent webcasting industry . The suit has some explosive political implications for Wisconsin Congressman (and Judiciary Committee Chairman) F. James Sensenbrenner, who forced the deal. Sensenbrenner later admitted taking $18,000 from the RIAA for a trip to the Far East.

Despite those and other protests, the RIAA reportedly refused to return to the bargaining table. The Alliance threatened to sue earlier this summer, then finally filed yesterday, alleging an "anti-competitive" conspiracy between the big record companies and the RIAA, along with the Voice of Webcasters group, to force smaller Net radio stations out of business.

The alliance lists 198 member stations, many of them individuals, on its site.

"This lawsuit is a publicity stunt that has no merit," commented an RIAA representative. "Record companies and artists have worked earnestly to negotiate a variety of agreements with a host of new types of radio services, including commercial and noncommercial Webcasters."