Australia's music Webcasters are closely monitoring a dispute over Internet music royalties in the United States that could severely impact the local industry.

The US dispute revolves around the determination of a royalty fee set by the Library of Congress to break an impasse between Webcasters and the recording industry over intellectual property issues. The resolution of the dispute is likely to guide local companies as to whether they are better off negotiating with record companies individually or follow the US example of a "one-stop-shop" licensing model allowing Webcasters to negotiate with the recording industry on a collective basis.

US Congress will vote this week to decide whether to support a bill that gives Internet broadcasters more time to challenge royalty fees set by Library of Congress. The Library of Congress set royalty fees at US$0.07 per song, per listener to settle a long running dispute between US Webcasters and the Recording Industry Association of America (RIAA).

The US recording industry group has given Webcasters until October 20 to pay their fees at the rate set by the Library of Congress. However US Webcasters argue that the royalty fee is too high. Webcasters have said that the bill to postpone the deadline six months - which gives them time to appeal to the US Federal Court against the rate - is their industry's only chance to survive.

Hamish Cameron, managing director of The Basement and music industry copyright lawyer with 20 years' experience, said the issue may provide guidance as to whether Australian Webcasters are forced to pay more or less than their US peers for music.

While US Webcasters need only pay a single broadcast royalty fee based on audience reach, Australian Internet broadcasters have to negotiate multiple deals with record companies.

"It might determine a rate of pay and it'll be interesting to see if we're paying exorbitant rates or paying proportionately reasonable rates," said Cameron.

Cameron wants the Phonographic Performance Company of Australia (the RIAA's Australian equivalent) to follow the US example and adopt a single-fee, collective license model. However most importantly he believes it should be an audience rather than revenue-based model, native to the Australian broadcasting environment.

However, a PPCA spokesman said that a collective licensing model for Webcasters was still "a long way off", as large music labels refused to negotiate with Internet-based broadcast operations.

Cameron said that the PPCA had offered The Basement collective licensing terms, but said that they were unreasonable as they put the company on an unequal footing with commercial operators.

Australian commercial free-to-air operators pay the PPCA a portion of their advertising revenue as a single fee. The fee is easy to calculate as operators lodge their revenue figures with the Australian Broadcasting Association (ABA) to qualify for other broadcast licenses.

Webcasters are not required to report their advertising revenue earnings to the ABA and The Basement's fee was to be derived from its total revenue rather than its advertising revenue.

Cameron said he would have had to create complex company structures in order to keep his license contributions in line those paid by Australian free-to-air commercial broadcasters. That would defeat the purpose of one the single-fee model's main advantages, administrative overhead.

"I would have to set up a matrix of companies and what am I doing then, playing tax avoidance?" said Cameron.

Cameron said that while it would be easier for his company to lodge one license fee rather than cope with the "administrative nightmare" of managing between five and seven license deals he has discovered some advantages to dealing outside the collective.

According to Cameron it gives his operation more bargaining power when dealing with smaller record labels.

"The independent record companies need us, the majors don't but, if you've got a collective bargaining system, we're paying the independents the same rate that we're paying the majors," said Cameron.

On the flip side, he argues, smaller labels have a better chance of giving their artists' music content airtime.

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