Washington, DC (July 3, 2007) -- SoundExchange announced that it proposed a voluntary cap on the minimum fees charged against royalties for sound recordings played on internet radio. SoundExchange proposed capping such advance payments at $2,500 per service--a move that DiMA characterized as "simply a stay of execution for Internet radio."
Recently enacted regulations (due to go into effect on July 15) require each webcasting service to pay a $500 minimum fee "per station or channel" regardless of the overall number of stations/channels they are streaming. By making this offer, SoundExchange is addressing certain webcasters' concerns about their liability for per channel minimums.
"There was a lot of misunderstanding out there about how the minimum fee would apply, and frankly some people were wrongly stating SoundExchange's policy on this matter," said John Simson, executive director of SoundExchange. "We certainly don't want anybody to get unduly hurt by the minimum fee, but there is a value to music and a cost to administering the digital royalty program, and we wanted to ensure that everyone was treated fairly -- artists, webcasters and record labels."
SoundExchange has reached out to the Digital Media Association, a national trade organization devoted primarily to the online audio and video industries, this week to discuss the proposal. "The idea that the per-channel minimum might have a disproportionate impact on certain internet radio stations was never presented to the Copyright Royalty Judges," said Michael Huppe, general counsel of SoundExchange. "Nonetheless, at the request of Congress, we are trying to work with the small subset of affected webcasters, and are offering this proposal in the hopes of addressing those concerns."
The Digital Media Association, however, remained unmollified and issued a response to the offer from SoundExchange. Jonathan Potter, executive director of the Digital Media Association, issued the following statement: "DiMA would agree to a $2,500 per-service cap for the entire term of the CRB ruling (through 2010), but not the partial-offer presented to us in writing, which would terminate in 2008.
"Any offer that doesn't cover the full term is simply a stay of execution for Internet radio. The looming 2009 billion-dollar threat is destabilizing and inhibits investment and growth. DiMA, like thousands of artists and millions of consumers, wants a solution that promotes long-term industry growth. A billion-dollar 'minimum fee' is equally absurd in 2006, 2007, 2008, 2009 or 2010. It should be eliminated -- period.
"DiMA is disappointed to have to issue this statement; we would prefer to resume negotiating important issues directly with our counterparts rather than through press releases."
Digital Media Association