SoundExchange, the company that collects royalties on behalf of music labels, is offering
a new deal to internet radio broadcasters in an effort to reach a compromise on the proposed royalty increase that is due to take effect this month. Webcasters have battled the new rates for months, claiming many companies unable to afford such fees will be put out of business.
Under the July 15 ruling, each webcaster will have to pay a $500 minimum fee "per station or channel" to SoundExchange, meaning that many webcasters that manage multiple stations would end up paying several thousands of dollars apiece per year. However, under the newly-proposed structure by SoundExchange, annual payments would be capped at $2,500 total, regardless of how many stations a webcaster operates.
Nevertheless, there is a catch: the cap would only be in effect through 2008, not for the full term of the new royalty rates, set by the Copyright Royalty Board (CRB), which are in effect through 2010. The Digital Media Association (DiMA) responded to SoundExchange stating that although they agree to the cap, they do not agree to its time constraint.
"Any offer that doesn't cover the full term is simply a stay of execution for Internet radio," said Jonathan Potter, executive director of DiMA in a statement. "The looming 2009 billion-dollar threat is destabilizing and inhibits investment and growth. A billion dollar 'minimum fee' is equally absurd in 2006, 2007, 2008, 2009 or 2010. It should be eliminated—period."
SaveNetRadio.org, one of the bigger groups fighting against the rate increases, stated the proposal "falls well short of even the lowest standard of a temporary fix". SoundExchange still stands by the July 15 ruling which will more than double the current royalty rates broadcasters must pay to copyright holders to play a song. Negotiations between SoundExchange and DiMA will continue as the deadline approaches.