A new version of H.R. 5469, the Small Webcaster Settlement Act (SWSA), has finally been passed by the Senate. The bill concerns royalties which Internet radio stations may have to pay to the Record Industry Association of America (RIAA), and as we reported in October, will have a serious impact on the future of alternative radio.
The original version of the bill [report] simply suspended the deadline for these payments, with the expectation that webcasters and the RIAA would come to their own agreement. But a second version [report], which was the first to reach the Senate, instead detailed a complex system of specific royalties - which would have taken many college-based and other small webcasters off the air. This latter version received strong criticism from webcasters and ultimately died in the Senate [report].
The latest version of the bill more closely resembles the first one. It suspends the payment of royalties until June 20, 2003, by which time webcasters will hopefully reach a private agreement with the RIAA.
Senator Patrick Leahy (D-VT) spoke in front of his colleagues before the bill was voted on, reminding them of the importance of small stations. "Many of the new webcasters... can and do serve listeners across the country and around the world," he said. "They provide music in specialized niches not available over the air. They feature new and fringe artists who do not enjoy the few spots in the Top 40. And they can bring music of all types to listeners who, for whatever reason, are not being catered to by traditional broadcasters."
Although the SWSA does not spell certain doom for tiny Internet radio operations as its predecessors would have, it ultimately does very little to directly support the small-scale webcasting phenomenon. In past negotiations with the RIAA, webcasters have been narrowly represented. For example, the Voice of Webcasters previously negotiated terms which would have been favorable only to larger Internet radio stations, while giving the impression that they spoke for the whole webcasting community.
However the negotiations take place, the SWSA says that they must be concluded by December 15th. If small webcasters are going to have their say in this matter, they have less than a month to band together and do it. Yet, even if this is possible, the SWSA does not obligate the recording industry to make any deal at all. In fact, the December deadline may come and go with no new agreement on music played over the Internet airwaves - which would leave numbers of small stations with about six months to pay some very large bills. At 0.07¢ per listener per song, going back to 1998, many such stations will be financially wiped out by the royalties.
In June, former Broadcast.com (Yahoo!) executive Mark Cuban revealed to Radio and Internet News that the 0.07¢ deal was "designed so that there would be less competition, and so that small webcasters who needed to live off of a 'percentage-of-revenue' to survive, couldn't." The recording industry is set on stifling these alternative music sources, and has powerful corporate allies to help it get its way.
None of these shenanigans will increase music sales. Certainly they won't improve the RIAA's public image, so badly tarnished by its bullying tactics and exorbitant pricing schemes that it is becoming universally viewed as a negative influence in the performing arts. In the battle over webcasting, the recording industry is showing its true colors more than ever. If it fails to make a deal that benefits small webcasters, its very relevance to the music world will be in question.
However things turn out, new sounds will continue to flow from myriad sources. Public radio, pirate and shortwave radio, Internet song trading, and musicians who steadfastly refuse to associate with the major labels, all assure us of this fact. Stay tuned as we continue to follow this musical David and Goliath.