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NPR, Others Challenge Online Royalties

June 1, 2007 • Darrell Shandrow Hilliker

NPR, Others Challenge Online Royalties
May 31, 2007 – 3:12pm

By SETH SUTEL
AP Business Writer

NEW YORK (AP) – National Public Radio is teaming up with online radio
broadcasters to appeal new music royalties that they say would put smaller
operators out of business and force others to sharply scale back their
online music offerings.

NPR filed a notice with the U.S. Court of Appeals in Washington Wednesday
signaling that it would challenge the ruling by a panel of
copyright judges that would sharply raise the amount of royalties that NPR
stations and others
have to pay record companies for streaming music over the Internet. NPR
also said it was filing a request with the same court on Thursday along with
other Webcasters for an emergency stay blocking the adoption
of the new rates, which are set to go into effect July 15.

Several NPR member stations such as KCRW in Los Angeles have significant
online audiences for music programming, and would have to drastically
cut back those offerings under the new royalty rates, NPR says. NPR
spokeswoman Andi Sporkin, in a statement, called the decision by the
Copyright Royalty Board on May 1 "ill-conceived" and said it would cause
"irreparable
harm" to member stations by forcing them to cut back on streaming music
online.

In addition to NPR, smaller Webcasters and a group representing major
Internet companies including Yahoo Inc., Time Warner Inc.'s AOL unit and
RealNetworks Inc. were expected to join in the motion for a stay on
Thursday.

Separately, a bill seeking to block the new royalties and implement a
different payment system is gathering steam in Congress. The Internet
Radio Equality Act has 100 co-sponsors in the House of Representatives and
has also
been introduced in the Senate, says Kurt Hanson, who operates a small online
radio company called AccuRadio. Hanson says the new royalty rates would put
smaller operators such as his out of business. Currently, smaller Webcasters
pay a portion of their revenues – usually from advertising – in royalties,
amounting to about 10 percent to 12 percent. The new rates would require
them to pay each time a song is heard by a listener, as well as minimum
amounts per channel.

The royalties in question only apply to digital transmission of music, such
as over the Internet and through satellite radio. Sirius Satellite Radio
Inc. and XM Satellite Radio Holdings Inc. have their own agreements with the
music industry, but those are also being renegotiated. Normal radio
stations don't pay those royalties for regular broadcasts since radio
airplay is seen as having value for promoting sales of music CDs. Both
traditional radio stations as well as online broadcasters pay separate
royalties to the composers and publishers of music.

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