New York (July 16, 2007) -- SoundExchange has made a commitment that webcasters can continue to operate without fear of legal action while a revised deal is hammered out. The last-minute compromise between internet radio and the music industry has given small and large webcasters a last minute reprieve from the new royalty rates, which were due to come into effect July 15.
The new rates threatened the continued existence of webcasters, in particular those serving multiple channels or stations, with royalties and fees--backdated to January 2006--that in many cases exceeded annual revenue. The rates set by the Copyright Royalty Board impose a $500 minimum fee "per station or channel," plus a rate of 0.08 cents per song per listener for 2006 and 0.11 cents for 2007 (increasing yearly to 0.19 cents in 2011).
SoundExchange, the collection agency working on behalf of record labels and artists, made a commitment to webcasters before the House Commerce committee late last week that there would be no legal action taken as long as negotiations continued. But that commitment came with a price: SoundExchange agreed to a proposal from DiMA, representing internet radio operators, to cap the per station fee at a maximum of 100 channels, i.e. $50,000, as long as webcasters "agree to provide more detailed reporting of the music that they play and work to stop users from engaging in "streamripping" -- turning Internet radio performances into a digital music library," according to a statement released July 13. According to SoundExchange, as reported in the Radio and Internet Newsletter, only three of the top 20 webcasters are in perfect compliance with their reporting commitments and only 11 have even tried.
Meanwhile, the chairwoman of the Committee on Small Business, Nydia M. Velazquez, and ranking member Steve Chabot introduced H.R. 3015, bipartisan legislation aimed at postponing the implementation of the CRB's new fees for 60 days. The bill, which is expected to pass through Congress quickly, would not impact the pending Internet Radio Equality Act, introduced April 23 by U.S. Reps. Jay Inslee (D-WA) and Donald Manzullo (R-IL), which proposes a percentage-based royalty system similar to that paid by satellite and cable radio broadcasters.
Digital Media Association