Library of Congress Rejects Proposed Rates for Webcasting, Defers Final Ruling
Today marked the deadline for a ruling on proposed webcasting rate put forward by a Copyright Arbitration Royalty Panel (CARP)—and Librarian of Congress James H. Billington has said no, without comment. A "final determination" is promised by 6/20.

"The Register of Copyrights recommends, and the Librarian agrees, that the CARP's determination must be rejected. A final decision will be issued no later than June 20, 2002," the decision reads.

"In accordance with 17 U.S.C. 802(f), the Librarian is given 90 days from date of delivery of a CARP report to review the determination and issue a decision setting forth the final royalty fee and terms of payment," continues the announcement. "However, if the Librarian rejects the CARP's determination, section 802(f) provides an additional 30 days for the Librarian to render his final determination."

The amount put forward by the panel, about .14 cents per song per listener, has been the subject of intense controversy, online debate and, most recently, lobbying in Washington. The RIAA and label reps supported the proposed rate, arguing that artists and other rights holders must be adequately compensated for the use of their material online. Webcasters and their advocates bitterly opposed the proffered fee level, claiming it would drive all but the biggest net-radio enterprises out of business.

Both sides got political heavyweights to write letters to the Librarian, urging either reconsideration to save fledgling webcasters or refusal to allow outside interests to play a role in the decision.

While today’s result seems unclear, folks on all sides of the issue commenced to spinnin’. Representatives of the online radio sector posted their huzzahs on news sites and bulletin boards, declaring that digital-music advocates’ pleas had been heard and that the refusal of the rates was a triumph of democratic action.

"Tuesday's landmark decision is a massive win for the webcasting community, which spent the last few months in a bitter campaign to have the CARP ruling thrown out," reads an Internet News story.

The RIAA-spawned SoundExchange organization, consisting of labels large and small, is set to collect said royalties and disburse them to creators. Perhaps unsurprisingly, they view the result a bit differently.

"Given the complexity of the issues, I am not surprised by the Librarian's decision," reads a statement from Executive Director John Simson. "I remain confident that we can find creative solutions to enable webcasting to thrive while providing recording artists and those who invest in sound recordings a fair and equitable royalty in return. Over the past
three years, webcasters have paid for bandwidth, rent, hardware, software and other business expenses. It is time that they finally start to pay the artists and record companies whose creative output is the most important component of their business.

"On behalf of our members and the thousands of artists we represent," Simson concluded, "SoundExchange will continue our discussions with webcasters to see if long-term solutions can be reached in the marketplace."

Indeed, some observers believe the Librarian’s thumbs-down on proposed rates was designed to give the participants a chance to reach a solution on their own.

"The Librarian has rejected the arbitration panel's determination, but we do not know why or what decision the Librarian will ultimately make based on the evidence presented," reads a statement from RIAA Prexy Cary Sherman. "Since both sides appealed the panel's determination, anything is possible. We look forward to the conclusion of this process on June 20th, and to the day when artists and labels finally get paid for the use of their music."