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BY KURT HANSON
The "Small Webcaster Settlement Act (SWSA)," which Congress passed last week (click here, type in "HR 5469," and click on the SWSA version to read the bill), seems designed primarily to permit copyright owners and small webcasters to implement the terms of an agreement hammered out during a few days of intense negotiations conducted in early October in the House Judiciary office at the urging of Rep. James Sensenbrenner. (The House bill that describes the terms of their agreement was called the "Small Webcaster Amendments Act (SWAA);" click here to read RAIN's summary of those terms.)

However, the bill passed last week allows for a "negotiating" period until December 15th for SoundExchange to come up with a "small commercial webcaster" license and make it available to that class of webcasters. Since the act notes that an agreement has already been reached — in principle, anyway — one can reasonably assume that this period is designed for subtle deal points to be cleaned up.

Remember, the terms in the earlier version of the bill were hammered out in a just a couple of nights of stressful, clock-is-ticking sessions. Hopefully, all parties can benefit from taking a little bit of extra time to craft the precise language of the license so that it truly accomplishes what it is intended to accomplish.

Here are some of the points in the deal that seem, in my opinion, worthy of cleaning up:

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Reprinted from yesterday's edition of RAIN:


BY PAUL MALONEY
Players from all facets of the industry are weighing in publicly with their reactions to the Congressional passage of H.R. 5469, and in some cases offering site visitors their own analysis of the measure.

Beethoven.com's Kevin Shively contributed an essay to this issue (please see below). We've compiled some of the reaction from elsewhere in the industry below.

Noted industry author and columnist Brad Hill has an excellent analysis and commentary on the new law on his Digital Songstream site (here). He says the bill offers, "small Webcasters some kind of escape hatch from the dire CARP agreement, which requires a per-song, per-listener royalty scheme -- one which would certainly drive hundreds or thousands of small stations right out of business." But he warns, "Whether small Webcasters will be able to negotiate acceptable agreements with SoundExchange (on behalf of the labels) remains to be seen."

On his SomaFM.com site, webcaster Rusty Hodge is optimistic, but just as cautious as Hill. He does in fact mention that the measure will be good for broadcasters, religious broadcasters, and almost all categories of webcasters.

However, he admits that he's "still not sure if this new form will be good for us," and adds "I don't think this deal does ANYTHING to help hobby webcasters -- one group that was vocally opposing the previous incarnation of HR5469." He suggests the costs of filing for 501(c)(3) status (to be a true noncommercial entity) ("I've heard estimates that the costs for all the fees and required accounting reviews can easily exceed $2000 a year") might make this route prohibitive for the smallest of hobbyist webcasters.

The agency appointed to collect the sound recording royalties, SoundExchange, called the development "a positive step," and executive director John Simson called upon broadcasters and webcasters to conduct the upcoming negotiations in a cooperative spirit. "Looking to the future, we hope that the costly and uncertain roads of litigation and legislation will not be necessary. We urge webcasters, broadcasters and others to meet us in good faith to find marketplace solutions, rather than fighting in court and other forums. It's now time for us all to work together to realize a vigorous digital media marketplace that recognizes the value and contributions of artists and record companies. "We are pleased that Congress found a way to implement the rates and terms for small webcasters that the House proposed last month. We will work expeditiously toward putting those rates and terms into effect as Congress has requested." Remember, the new law contains no actual rates or percentages (so that those rates could not be seen as precedential), but does allow for the settlement reached between the RIAA and small commercial webcasters. Simson's complete comments are here.

Interestingly, while the Recording Industry Association of America (RIAA), in their statement (here), chose to distance themselves from the element of the law that enables SoundExchange to negotiate terms even for non-RIAA/non-SoundExchange artists and labels, they too expressed support.

"The recording industry did not seek nor propose this authorization. Although the intent of the House bill was to preclude the use of the rates and terms in the bill as precedent in future negotiations and rate proceedings, certain broadcasters were concerned that it did not adequately achieve that objective and proposed the approach in the Senate compromise as a means of addressing that concern. In an effort to support the goal of the bill passed by the House, we support the Senate language."

Thomas F. Lee, president of American Federation of Musicians (AFM), the members of which are among the beneficiaries of collected fees, was among the most supportive of the measure. He expressed his pleasure not only for the stipulated "direct payment" of artists, but the afforded relief of smaller and noncommercial webcasters.

The group of smaller webcasters that had been adamantly opposed to the SWAA-version of H.R. 5469 is represented by a group called the Webcaster Alliance. In fact, just last Monday the organization published the first installments of a multi-part "exposé" on the small webcaster version of the law called "American Injustice: H.R. 5469."

However, the group has now expressed optimism that the new law has indeed eliminated the dangers they saw in its earlier incarnation. Webcaster Alliance president Ann Gabriel, in a statement (here), said, "We are hopeful that webcasters and the RIAA will work together and negotiate in good faith for fair and equitable rates that will allow the streaming media community to grow into a healthy, profitable and viable industry. The webcasting community applauds and appreciates the effort and the support we have received from Senator Helms. We look forward to an equitable resolution!"

Largely, small commercial webcasters themselves expressed thanks. Jim and Wanda Atkinson, webcasters who operate 3WK.com, are viewing the new law in a more positive light, and expressed their appreciation for listeners' support. "This version of the bill is much better than the original (thanks to Jesse Helms of all people)...Just think -- every one of you who phoned/faxed/emailed your Representatives helped get a bill passed in Congress. You changed webcasting forever!"

Onion River Radio's Frank Schliemann (right), in a statement to RAIN, expressed his gratitude to his state's senator.

"Onion River Radio and our loyal listeners thank Vermont's Senator Patrick Leahy, whose leadership on behalf of Internet radio catalyzed Congress's attention to our cause...Today's Congressional approval of the Small Webcaster Settlement Act of 2002 ensures that our audience will continue to enjoy Onion River Radio's 'freeform' style of programming."

Some in the industry had expressed the belief that Senator Jesse Helms, who had placed the "hold" on the SWAA-version of the law before Congress recessed, had acted merely to kill the bill in the interests of noncommercial and religious broadcasters. Many were surprised to learn that indeed, Helms's staff was instrumental in getting the bill passed. One person not surprised was Deborah Proctor (left), general manager of non-comm broadcaster WCPE, a Helms constituent. She wrote to RAIN before the bill was passed, "I have read many things that people who have never met Mr. Helms have said about him. I know many people have strong feelings about him -- but I have never heard anyone who worked with him say that he didn't keep his word -- and from personal experience, when he called me up and told me that he would help WCPE, he kept his word."

Webcasting lobby organization Digital Media Association

Here's a collection of some of the comments we've received from RAIN readers regarding this morning's news: