Decision on Web radio reached

WASHINGTON (AP) -- Internet music broadcasters and the recording industry, opponents in the debate over online music royalties, are both unhappy with a government decision setting rates for webcasters.

The U.S. Copyright Office decided Thursday to charge webcasters 70 cents per song heard by 1,000 listeners, or half of what a government panel had proposed in February.

John Potter, executive director of the Digital Media Association, said the rate was still too high, but was an improvement over the earlier proposal.

The recording industry had sought even higher royalties to compensate artists and music labels for using their songs.

The 70-cent rate "simply does not reflect the fair market value of the music," said Cary Sherman, president of the Recording Industry Association of America.

If the decision is not changed, the first monthly royalty payments will be due in November. The fees are retroactive to 1998 and full payment of royalties from past years will be due in October.

Internet radio -- either simulcasts of traditional over-the-air radio or Internet-only stations streamed through the Internet to computers -- is becoming more popular as people get high-speed connections at home.

Webcasters said the rates initially proposed were too high and would cost larger Internet radio broadcasters hundreds of thousands of dollars annually, more than they get from advertising or listener contributions.

John Jeffrey, vice president of Live365 Inc., the largest Internet radio network, said even the lower rate may kill the fledgling industry. He said it will cost his cash-strapped company about $100,000 a month.

"This is a rate that still means the majority of independent webcasters will cease to operate," Jeffrey said.