RIAA holds fire on Webcast licensing scheme

The launch of a performance royalty program to reimburse artists when their music is played online has been postponed, even as an alternative system for controlling online radio copyrights is gathering steam in Britain.

The Recording Industry Association of America (RIAA) announced last Wednesday that it planned to create a body that would collect and distribute royalties from Internet radio stations and distribute them to record companies and artists. This initiative, dubbed SoundExchange, was due to launch 11 October, but it has now been put back until a meeting of the board of directors can be rescheduled.

The Digital Millennium Copyright Act requires Web radio stations to pay royalties for the music they transmit. No single body is yet responsible for collecting these fees, however. SoundExchange was created in partnership between the RIAA, the American Federation of Television and Radio Artists (AFTRA) and the American Federation of Musicians (AFM). It has not yet been approved by the US Copyright Office.

There have been complaints from some Webcasters and independent artists that a body dominated by the RIAA would side with the major labels in the event of conflict between the labels and these smaller groups. However there are suggestions that representatives of artists and smaller music labels will be given places on the SoundExchange board.

The RIAA, which represents labels like Seagram's Universal Music and Warner Music Group, has fought fiercely to protect copyright online. It recently set up a deal to license music Webcasts on Yahoo. It is also suing both Napster and Scour for copyright infringement.

Alison Wenham, chief executive of the Association of Independent Music (AIM), thinks it is important to recognise the RIAA's efforts to defend the principle of copyright. "People must remember that record labels take the greatest financial risk, compared to musicians or fans. It's easy to bash the big labels, but it is important to take action to back copyright," she said.

Since August, AIM, which represents the interests of over four hundred UK independent record companies (26 percent of the retail market), has been running a trial scheme under which Web sites and Internet radio stations may legitimately use its members' music on the internet.

Over 40 organisations have signed up for the trial, including Stormlive.com, Capital, and NME. These companies now have the right to transmit video clips and artwork, and some live audio streaming, of any work whose copyright is owned by AIM's members which includes the Ministry of Sound and Beggars Banquet. Previously, they would have had to negotiate with each independent label individually.

AIM's legal advisor, Helen Smith, is responsible for the trial scheme, and she believes that both the independent labels and the Web sites benefit from this collective licensing. "The trial protects labels' collective bargaining power whilst reacting to an increasingly pressing need to meet the immediate requirements of users who want to trade legitimately," Smith explained in a statement.

Wenham believes that, despite the furore over Napster and Gnutella, the Internet is still a great opportunity for the music business "The Internet is no respecter of territory. There is the opportunity for ruthless fans to take advantage of the current situation, but that threat must be measured against the huge potential of the Web."

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