While a verdict was rendered on Tuesday (May 21) regarding proposed royalty rates for online radio stations, it's still unclear which side of the clash will come out satisfied.

The U.S. Librarian of Congress rejected rates proposed in February by the Copyright Arbitration Royalty Panel ("CARP"), which suggested that royalties be paid to record companies and artists in the amount of 0.14 cent per listener per song for online-only stations, and 0.07 cent for online stations that simulcast radio broadcasts. The ruling didn't require an immediate explanation, however, so for the next 30 days, the only certainty is that the rates will differ from what the CARP presented.

Librarian James H. Billington must explain why he rejected the CARP's recommended rates — and determine them to be either too high or too low — by June 20, according to a Library of Congress spokesperson. He may then send the case back to the three-person panel for reconsideration or set his own rates.

This new fee for online broadcasters would bring an additional revenue stream for artists and labels via the Recording Industry Association of America. While both land-based and Internet stations pay royalties to songwriters and publishers via organizations such as BMI and ASCAP, conventional radio broadcasts are considered promotional tools by Congress and are therefore exempt from paying the RIAA. When an online royalty rate is decided, the money would be split evenly between artists and their labels.

The RIAA could shed no further light on the ruling. "We do not know why [CARP's determination was rejected], or what decision the Librarian will ultimately make based on the evidence presented," RIAA President Cary Sherman said in a statement.

In its current state of ambiguity, the Librarian's decision is perhaps the only thing the RIAA and its opponents, the Digital Media Association, can agree on. (The DiMA is an alliance of companies that develop and use technology to perform and promote music and video online.)

When the CARP's recommended royalty rates were presented on February 20 (see "Online Radio Facing Possible Exinction"), the RIAA wanted a higher rate, closer to 0.4 cent, while the DiMA and online Webcasters were hoping for a lower rate in the neighborhood of 0.013 cent.

Fearing that high royalties — if ruled payable retroactive to 1998 — would force many free, independent stations into extinction, hundreds of online stations voluntarily went dark on May 1 in an act of protest that prompted concerned listeners to weigh in to Congress on the situation (see "Online Radio's Day of Silence Heats Up Royalty Debate").

"Since both sides appealed the panel's determination, anything is possible," the RIAA president said in his statement. "We look forward to the conclusion of this process on June 20 and to the day when artists and labels finally get paid for the use of their music."

The opposing view of DiMA Executive Director Jonathan Potter is more optimistic. "When Congress enacted the Internet radio statutory license, it intended to promote a new medium and promote artists' welfare. Today's decision by the Librarian offers hope that the final royalty will be more in line with marketplace economics than was the arbitrators' proposal. If so, then the result will accomplish Congress's goals."