House OKs Bill To Tame Net Radio's Wild Frontier

Legislation establishes framework for webcasters to license music from record labels.

Copyright law and cyberspace took a giant step toward alignment Tuesday when the House of Representatives passed a bill aimed at protecting intellectual-property rights as well as defining guidelines for Internet radio.

If the bill becomes law, supporters say it will go a long way toward establishing broadcast boundaries on what until now has been the wild frontier of the World Wide Web.

The Digital Millennium Copyright Act, which passed the House on a voice vote, provides the legal framework for webcasters to establish licensing agreements with record companies to broadcast music without permission in exchange for a

royalty rate. If the bill -- which now must be reconciled with a Senate version that passed 99-0 in May -- is signed into law by President Clinton, negotiations for such rates could begin before 1999.

"If you can listen to a song any time you want, why would you buy it?" said Steven Marks, an attorney for the Recording Industry Association of America, which, along with the Digital Media Association (which represents companies involved with the transmission and marketing of music on the Net), offered input to legislators on the bill.

If the common metaphor for cyberspace is "information superhighway," then Internet radio has established itself as a vast network of roads, filled with vehicles and untamed by traffic laws. Ever since companies and individuals began broadcasting music on the Internet, the question of which copyright restrictions apply to Web programs has been a matter characterized -- at best -- as confusing.

"Every time we have a new technology out there -- whether it's a printing press, a photocopy machine, a VCR -- it upsets the apple cart on our intellectual-property law," said Peter Schalestock, counsel and communications director for Rep. Rick White, R-Wash., who is a supporter of the bill. "Music was really getting out in front of the law on the Internet."

Nicholas Butterworth, president of the SonicNet Web-based entertainment and information network and the Digital Media Association, praised the bill for clarifying Internet radio regulation and encouraging future agreements on issues such as the digital download of music.

"It's a real change from before when everything seemed hopelessly confused," Butterworth said. "There's much more clarity, much more stability, and finally the chance to build a real business without worrying about an uncertain legal horizon."

Under the bill, webcasters applying for licenses are subject to certain limitations. Restrictions range from preventing interference with anti-piracy technology to forbidding certain practices that are believed to hurt album sales, such as single-artist stations, preannounced playlists and archived programs that remain on the Net for more than two weeks.

Some critics of the bill, however, say it requires webcasters to pay fees that are not charged to traditional radio stations, which pay licensing fees to the

composer of a song but not the copyright owner of the recording (typically

the record label).

But overall operating costs are significantly lower for webcasters than radio broadcasters, Marks contends. A Net radio station can begin global transmission with a single computer and software, avoiding expenses such as transmitters and Federal Communications Commission licenses.

Some Net radio sites began preparing for a licensing agreement with record

labels long ago. Ian Macdonald, vice president of database development

with Canadian webcaster RadioMoi, called the American bill sensible.

"We've made plans from the beginning to make royalty payments to the record

industry and the songwriters," said Macdonald, whose station carries 12,000

songs in its listener-interactive catalog.

If the bill is passed into law, foreign Net radio stations such as RadioMoi

will be required to pay the new licensing fees to cybercast into the United

States; similarly, American webcasters must arrange licensing agreements

for transmission into other countries.

In addition to the licensing agreement, the Digital Millennium Copyright Act

also affirms U.S. support for the World Intellectual Property Organization

Treaty. By signing the treaty, nations agree to copyright measures

that are close to existing U.S. law in stringency, Schalestock said. The

treaty is particularly valuable for enforcing crackdowns on the worldwide

piracy of music, software and movies, he said.

"Up until now there's been a great degree of uncertainty, doubt, misunderstanding and sometimes outright fear about the impact of the

Internet on the music industry," Butterworth said.

"While labels realize that this offers a tremendous opportunity to create

new revenue streams, they've been quite rightly concerned about the

possibility of piracy. What this agreement means, is that for a large

class of new Internet radio applications, that uncertainty is gone."