Earlier this year the Copyright Royalties Board (CRB), a body
which reports to the US Congress, raised the royalty rates to be
paid by online broadcasters. The rates were higher than those paid
by satellite radio services. Traditional broadcasters do not pay
CRB rates at all.
Internet broadcasters said that for many of them the rates
exceeded their revenue as businesses and, since they were
retrospective, would instantly put them out of business.
They have been negotiating with SoundExchange, the agency
charged with collecting fees, about the rates and about a minimum
charge of $500 per station.
Broadcasters claim that the minimum fee, which is designed to
cover administrative expenses, is too high. Some companies have
hundreds or even thousands of separate online radio stations.
Webcaster organisation the Digital Media Association (DiMA) has
agreed a deal with SoundExchange to cap the total fee that any
company will have to pay at $50,000. Though the deal only applies
to the two parties, they are recommending to the CRB that it be
adopted as policy for all internet radio stations.
The deal involves less stringent demands on protection of the
music being broadcast. DiMA said that a previous SoundExchange
proposal was dependent on companies agreeing to "technology
mandates" believed to relate to digital rights management (DRM)
anti-piracy technology.
The new deal contains a requirement that stations report all
played tracks to SoundExchange and co-operate in a discussion on
anti-piracy technologies.
"This agreement marks an important first step in the internet
radio royalty negotiation process,” said DiMA executive director
Jonathan Potter. “We’re encouraged by this development and the
knowledge that good faith negotiations have begun. We look forward
to the next step of negotiating the royalty rates that will allow
for the growth of the Internet radio industry, a platform for music
discovery for consumers.”
"This agreement shows that we can address specific issues of
concern to the industry through private negotiations while
upholding the integrity of the CRB process and while protecting the
interests of SoundExchange members," said John Simson, executive
director of SoundExchange.
"We now hope to move forward together with our partners, the
webcasters, in providing an enhanced listening experience through
internet radio," he said.
Negotiations are ongoing on what royalty stations should pay per
song played. The controversy and the claim that it threatened the
very existence of internet radio had caused some political unease.
Two Senators, Ron Wyden and Sam Brownback, sponsored a proposed law
which would have undone the royalty rate rise, called the Internet
Radio Equality Act.
"We sponsored the Internet Radio Equality Act because the
Copyright Royalty Board’s decision to dramatically increase
royalties and apply what we see as unfounded minimum rates
threatens to devastate the internet radio industry," they said in a
statement earlier this month.
The chief executive of Pandora, one of the web's biggest radio
stations, previously told OUT-LAW Radio that the rate rise would be
fatal for his industry.
"It's an extraordinary increase in the rates that will
effectively kill internet radio as we know it today," Joe Kennedy
said. "Over 90% of internet radio will simply be gone. The net
result will be a huge loss of diversity, a huge loss for music
artists and a loss of virtually all of the internet radio that
exists."
