Deal struck on webcast royalties

Launch was one webcaster involved in the arbitrations

The US government has set a proposed royalty rate for broadcasting songs on the internet.

The decision comes after seven months of negotiations between record companies, musicians and webcasters.

The deal attempts to strike a compromise between the competing demands of broadcasters and webcasters who wanted a low royalty rate, and the labels and musicians who see the internet as a source of revenue.

The US copyright office panel suggested a rate of 0.14 cents per listener per song for songs played directly on the internet.

Record companies and musicians had wanted 0.4 cents per listener per song, while the webcasters had proposed paying 0.15 cents per listener per hour.

Alanis Morissette appeared before the panel

The internet broadcasters' proposed rate was 27 times lower than the one suggested by the record companies.

The panel's decision must be approved by the librarian of Congress in May before it takes effect, and represents a minimum rate which will apply in the absence of a freely negotiated deal.

The royalty rate is effective retroactively from 1998 until the present.

The money would will be split evenly between musicians and record companies.

The copyright office ruling establishes a new precedent for the US, where traditionally radio stations have not paid record companies a royalty, instead paying only the songs' music publishers.

The panel also proposed a rate of 0.07 cents per song for internet transmissions of regular AM or FM radio broadcasts, with lower rates for non-commercial broadcasters.

We feel that this is a thoughtful, carefully reasoned decision.

Eric Van Loon

The arbitration panel heard testimony from more than 50 witnesses, including musicians such as Alanis Morissette.

Chairman Eric Van Loon said the panel had made a "thoughtful, carefully reasoned decision".

However, the recommendations left both sides wanting more.

MTV runs a number of internet radio stations

"We would have preferred a higher rate," said Hilary Rosen, president of the Recording Industry Association of America.

But she acknowledged that the proposed rate was about 10 times the amount sought by webcasters.

"Artists and labels, who have supported these new businesses from the start with their music are one step closer to getting paid," she said.

The Digital Media Association, which represents companies that deliver music and video online, said it was "extremely disappointed" that the proposed rate was not lower.