SoundExchange Makes New Offer to Small Webcasters

At the time, it seemed the means to an end: Back in the middle of July, copyright royalty collection agency SoundExchange offered internet radio broadcasters an 11th hour reprieve from the potentially crippling rate increases they’d been dreading, in the interest of keeping negotiations open between the two parties.

But now, more than a month after the reprieve took effect, SoundExchange has finally offered a deal to small webcasters– i.e. those grossing less than $1.25 million in revenue per year (with an additional stipulation capping the number of monthly listening hours). The deal proposes that those qualifying stations would pay out around 10 percent of their revenue through 2010, when, presumably, negotiations would pick up again.

Most critics of the proposal suggest that the $1.25 million delineation between “small” and “large” webcasters leaves far too many in the large category, which would almost certainly pay a higher percentage. The SoundExchange offer also only applies to royalties paid to their members: 20,000 artists on all the major labels and thousands of independents as well, but leaving a wide swath of under-the-radar artists still subject to the higher Copyright Royalty Board-determined royalty rates.

In his Radio and Internet Newsletter (RAIN), AccuRadio chief Kurt Hanson expressed his frustrations with the offer, including that the agreement will discourage growth among webcasters who may fear they’ll enter the higher bracket and, therefore, be subject to higher rates. He hopes that negotiations with SoundExchange can continue, or that Congress intervenes on webcasters’ behalf. If neither of those things happen, qualifying webcasters have until September 14 to accept the offer. Should they reject it, they’ll either be subject to the original rates laid down by the Copyright Royalty Board or be forced to silence themselves.

In other net radio news, in a private meeting in New York last week between SoundExchange and a number of webcasting services, an agreement was reached that would cap the controversial per-channel minimum fee of $500 at a $50,000 annual payout per provider. Had this agreement not been reached, the fee would’ve otherwise topped one billion dollars for the likes of Pandora, Live365, and other large webcasters, according to AccuRadio’s Dan McSwain.

McSwain feels that both deals are insufficient gestures on the part of SoundExchange to impress Congress, to encourage lawmakers to rule in its favor. McSwain said, “The co-sponsors of the Senate bill have promised to push the Internet Radio Equality Act to a floor vote when Congress returns from recess if negotiations have not progressed. Surely, SoundExchange will use these meager concessions as proof to Congress that they are engaged in a good-faith effort to keep webcasters in business.”

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