Feds nix pact on Net radio stations

Federal copyright authorities have blocked a deal between the record industry and broadcasters that would have set royalty terms for radio-station broadcasts put online.

Broadcasters, such as radio giant Clear Channel, had agreed with the Recording Industry Association of America in late December to pay for music used online. Terms of the settlement had been kept secret, however.

The Copyright Office released its decision rejecting the deal Wednesday, potentially sending the two sides back to the drawing board.

Webcasters, or Web sites that stream music online but are not associated with a traditional broadcast radio station, are required to pay royalties for use of music under the terms of a 1998 copyright law.

Radio stations initially believed they would be exempt from this requirement as they put their broadcasts online, but the Copyright Office later ruled that they, too, were subject to the royalty payments. Courts later upheld this decision.

By mid-2001, many radio stations started pulling their broadcasts offline, citing in part the confusion over these royalty payments.

Internet-only Webcasters are in the middle of a long-running federal proceeding that should set their royalty payment rates by mid-March.