SX tells Congress webcasters may keep streaming

www.kurthanson.com

BY KURT HANSON
According to a commitment made yesterday by SoundExchange executive director John Simson in front of the House Commerce committee, small and noncommercial webcasters may continue streaming next week — i.e., after the CRB’s effective date of July 15th — without fear of the threat of legal action against them, and may continue doing so as long as good-faith negotiations between the parties are continuing.

In an interview with RAIN last night, Simson explained, “For the people who want to comply with the law and are in bona fide negotiations with us, we don’t want those people to be intimidated.  And we don’t want them to stop streaming.”  Simson qualified his statement by noting, “That’s just so long as they’re continuing to pay under the license they had.” 

Simson, representing SoundExchange, made this commitment at a House Commerce committeesx “roundtable” yesterday (see RAIN story here), which was an invitation-only event with approximately a dozen Congressmen, various staffers, and a number of representatives of both sides of the royalty dispute invited to attend and speak.

There was also apparently progress made at the roundtable on the $500-per-channel “minimum fee” that has threatened to bankrupt massively-multichannel webcasters like Pandora, Rhapsody, and Live365.

“We also did make
an offer today on the cap,” Simson revealed. “At the meeting, SoundExchange offered to accept DiMA’s suggestion of a cap on the ‘minimum fees’ of $50,000 per service  — that’s $500 per channel up to a maximum of 100 channels.” Simson said there were two conditions attached to this solution: “First, that they become much more compliant in their reporting obligations — only 3 dimaof the top 20 webcasters are in perfect compliance, and only 11 have even tried — and we need to move to census as soon as we can.  And we asked for their help with stream ripping, to work on a technologically-feasible solution.”  Simson said he thought DiMA found both conditions acceptable.

It should be noted that small webcasters would not be subject to the $500-per-channel aspect of the CRB ruling if they qualify for the small webcaster license that’s currently under negotiation.

Simson added, “Here’s what I said today:  The people who want to comply with the law and are in bona fide negotiations with us — that includes college broadcasters, NPR station, most people…  Our biggest desire is to have people paying legally and being compliant.”

Asked what he would tell webcasters who fear that streaming on July 16th might put them at risk for a lawsuit, Simson (pictured left) said, “I think the message to them is: ‘Look, Monday’s not that magical a day. It’s going to be business as usual at SoundExchange — trying to process data, trying to get deals done.  We’re not gonna be filing lawsuits.'”

Still to be addressed in negotiations between SoundExchange and the larger commercial webcasters are (A) the option of a percentage-of-revenues royalty rate for those classes of webcasters, and (B) a reduction in the CRB’s per-performance rates in 2008-10, which get increasingly difficult for any ad-supported webcaster to pay as the decade progresses.

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