US regulators set a per-song royalty rate for Internet radio Webcasters last week that was half the previously proposed rate – giving a break to some online radio stations who feared that the higher rates would drive them off-air.

The new per-song, per-listener royalty rate of 0.07 cents, however, is still being seen as unsatisfactory by both radio Webcasters and the recording industry, which have been locked in a bitter battle over the fees for nearly a year.

Online royalty rates were initially proposed by the Copyright Arbitration Royalty Panel (CARP), a group of retired judges assigned to determine how much companies should pay to stream radio over the Web. The CARP’s rate proposals, released in February, were rejected by the Librarian of Congress, however, after coming under heavy fire from Webcasters who said that the rates would drive them out of business.

The Librarian’s decision to halve the CARP’s proposed per-song rate offered some relief, but still left both sides wanting more.

Still too high The International Webcasting Association (IWA), a global, non-profit organization representing Webcasters, expressed its disappointment in the Librarian’s decision, saying that although the royalty rates are lower than those proposed by the CARP, they are still too high.

“Our members believe that the rates are so high as to imperil the entire Internet radio industry,” IWA Chairman Roger Dean said in a statement. The group said it would continue to lobby for lower rates, and appeal the Librarian’s decision if necessary.

The Recording Industry Association of America (RIAA) also expressed its dismay with the new rates.

“The rate simply does not reflect the fair market value of the music as promised by the law,” RIAA President Cary Sherman said. “This decision will certainly reinforce the steadfast opposition of copyright owners to compulsory licensing.”

Both the Webcasters and the recording industry have the option of filing an appeal.

Webcasters argue that the rates, which are retroactive – stretching back to 1998 – will put them out of business; however, the recording industry claims that artists and record labels are being forced to subsidize such businesses.