U.S. sets royalty rates for Web music

The U.S. Copyright Office has published long-awaited royalty rates for Web music broadcasts, ending a year-long process marked by legal and financial wrangling, the group named to handle the royalties said Tuesday.

Regulations published on Feb. 6 essentially rubber-stamped a resolution reached last April between online music broadcasters and the Recording Industry Association of America, the industry trade group for big record labels like Time Warner Inc.'s Warner Music and Vivendi Universal's Universal Music.

In addition to setting rates for the 2003-2004 license period, the Copyright Office also named SoundExchange -- a former RIAA arm spun off as a separate non-profit group in September 2003 -- as the sole designated agent to collect and distribute royalties from Webcasters and new online subscription services.

The recording industry and Webcasters finally agreed on a proposed 0.0762 cents per performance or 1.17 cents per aggregate hour tuned in for free, advertising-supported services. Webcasters had opposed other rates suggested by the RIAA, saying they would put them out of business.

The new regulations made official last week govern rates and terms for online music subscription services with non-interactive streaming components, Internet radio stations and traditional broadcasters that simulcast signals online.

The negotiated rates were submitted to the Copyright Office for adoption on April 14, but a legal objection by one company, finally dropped last month, led to a delay.

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Under the new regulations, all covered services are required to submit a lump sum payment to SoundExchange covering the period from Jan. 1, 2003 through Feb. 29, 2004 on or before April 14, 2004, SoundExchange said on Tuesday.

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Starting from March, services are required to make royalty payments within 45 days after the end of each month.

Additionally, commercial Webcasters, broadcast simulcasters and new subscription services must choose their preferred rate structure by March 8, 2004.

John Simson, executive director for SoundExchange, told Reuters that the group expects to shortly sign on to a worldwide agreement that would let Webcasters stream into foreign territories without fear of liability.