The recording industry and operators of educational and noncommercial web sites have settled on royalty rates for broadcasting music over the internet, circumventing a looming arbitration battle, the recording industry said June 3.

The agreement spares the industry and webcasters a costly arbitration with the U.S. Copyright Office, which was scheduled to start at the end of June, the Recording Industry Association of America (RIAA) said in a statement.

Under the deal, noncommercial webcasters—including college and K-12 radio stations that stream music online—will pay much less than earlier rules set by the U.S. Copyright Office would have stipulated. But the deal still limits how often they can play songs by the same artist online.

The deal covers six years, 1998 to 2004, and sets the range of annual minimum fees that nonprofit webcasters must pay to broadcast copyright music over the internet. The agreement also caps the recording industry's effort to secure licensing deals with all internet, cable, and satellite radio companies.

The industry reached a royalty deal with commercial internet music broadcasters in April.

"We now have all the pieces to the puzzle, and the recording industry can now concentrate on working with these groups to deliver music to fans in exciting, new ways," Steven Marks, an RIAA senior executive, said in a statement.

Depending on the year, how many broadcast channels a webcaster transmits on, and the type of web site, noncommercial webcasters will have to pay from $200 to $500 annually. Payments must be made to SoundExchange, an industry group that collects and distributes royalty fees to copyright holders from the digital broadcast of their work.

This year, school and college radio stations will pay a flat rate of $250. Next year, schools must pay $250 if their enrollment is less than 10,000 students or $500 if they enroll at least 10,000 students.

The deal is retroactive to 1998, however. Stations that broadcast music online before this year will owe a total of $200 if they broadcast in either1998 or 1999 or in both those years and will owe $250 for each of the years 2000, 2001, and 2002. Schools also must pay $50 this year and $25 next year in lieu of investing in costly recordkeeping software to track and record the songs they play online.

Existing stations will have until October 15 to make payments for streaming during any or all of the years from 1998 to 2003. New stations must pay the fees within 45 days of their first webcast. Payments for 2004 will be due on or before January 31.

"This agreement gives educational institutions with webcasting operations a break," said Sheldon Steinbach, general counsel of the American Council on Education. The deal "allows college webcasters with low-budget operations and small staffs to continue or begin streaming in a way that furthers students' media experiences on campus."