Washington - Feb 20, 2002 - The U.S. Copyright Office has made a ruling regarding the royalty costs radio stations must pay for streaming music online. The table below outlines the costs for stations, but the fees begin at $0.0007 per performance for songs and works retransmitted online.

Radio stations will also have to pay 9% of those total fees for what is called an Ephemeral License. This is to cover the shadow digital copy made when items are copied from one computer to another.

Radio stations and webcasters had argued for a rate of about $0.00015 per song, while record companies sought a rate of about $0.004. The deliberations to reach this final number came after six weeks of testimony from both sides late last summer.

"We would have preferred a higher rate. But in setting a rate that is about 10 times that proposed by the Webcasters, the panel clearly concluded that the Webcasters' proposal was unreasonably low and not credible," said Hilary Rosen, president of the Recording Industry Association of America. She added, "It is apparent to us, as it was to the Panel, that webcasters and broadcasters of every size will be able to afford these rates and build businesses on the Internet." In reality, the chosen rate is high enough that most radio stations will likely not stream their services at all.

Jonathan Potter, executive director of the Digital Media Association (DiMA), said, "We are extremely disappointed, however, that the panel's proposed rate is not significantly lower, as a lower rate would more accurately reflect the marketplace for music-performance rights and the uncertain business environment of the webcast industry," The DiMA plans to contest the rate through further comments to the Copyright Office. DiMA had offered to pay $0.15 per listener, per hour, to the labels and artists.

Eddie Fritts, president and CEO of the NAB said, "The ruling from the Copyright Arbitration Royalty Panel may have the effect of unintended consequences, in that many radio broadcasters may reevaluate their streaming strategies. If the powerful record company interests’ goal was to strangle a fledgling new service to radio listeners, it may have succeeded beyond its own expectations."

Summary of Royalty Rates For Section 114(F)(2) And 112(E) Statutory Licences