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 $200 for the years 1998 and 1999 collectively and $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.”

A 1998 law, the Digital Millenium Copyright Act, required that organizations broadcasting music and other radio content over the internet pay fees to record companies to compensate artists and music labels for the use of their songs.

Initial attempts by the industry and webcasters to agree on fees failed, and the dispute fell to the Copyright Office. The office set fees of up to 2 cents per listener for every 100 songs played, drawing complaints from large and small webcasters alike. Some operators of school radio stations said the fees would prevent them from being able to broadcast online (see “New copyright fees could silence school radio webcasts,”

A new round of arbitration was scheduled, but the agreement now makes that unnecessary.

Other limitations for webcasters remain in place. For example, under the 1998 copyright law, schools reportedly cannot play two songs from the same artist back to back online, and they can’t play more than three songs from the same album or four songs from the same artist within a three-hour period. These restrictions would require an act of Congress to be lifted.

See these related links:

Recording Industry Association of America

American Council on Education