SoundExchange, a nonprofit that collects royalty fees for copyright owners from digital radio services, reached an agreement with several pure-play webcasters that is an alternative to the unpopular rates established by the Copyright Royalty Board in 2007, MediaBuyerPlanner reports.
The deal, says popular music service Pandora (via the Associated Press), will help to ensure its own survival, and perhaps that of other webcasters, and may make the future of internet radio more secure.
In 2007, the Copyright Royalty Board - the oversight body created by Congress to settle royalty disputes in the music business - significantly raised the rates that internet radio stations must pay artists and recording labels, in a move which many online radio stations said would cause their demise.
The new revenue-sharing deal, with AccuRadio, RadioIO and Digitally Imported, lets the webcasters avoid the per-song royalty structure and instead choose an alternative structure that lets them pay either per-song royalties that are lower than the rates established by the Copyright Royalty Board, or 25% of their revenue, whichever is greater, in exchange for more robust reporting requirements. Smaller webcasters - under $1.25 million in total revenue - will pay a smaller percentage of sales, according to SoundExchange.
SoundExchange views these newly negotiated rates as an experimental structure intended to provide an innovative approach for a particular genre of webcasters and does not consider these terms indicative of fair market rates. "Time will tell if revenue sharing is the right move for both the recording community and webcasters," says John Simson, executive director of SoundExchange, "but we're willing to take the risk in the hope that artists, rights holders and webcasters can all benefit."
The Copyright Royalty Board lets SoundExchange negotiate rates on behalf of the artists and labels, while Congress allows a deal inked with any webcaster to apply to any other webcaster, reports the Los Angeles Times.
Pandora has been a leader in the crusade against the new rates, and if they hadn’t been resolved, "we were sunk," says Tim Westergren, co-founder of the webcaster. "It's a substantial reduction in the per-song streaming fee, and that was really the crux of the problem for us." Pandora has about 30 million registered users and hopes to become profitable next year.
SoundExchange had already struck online royalty agreements with the National Association of Broadcasters for over-the-air broadcasters that stream on the internet, and the Corporation for Public Broadcasting, which represents public radio stations, as well as with other small commercial webcasters, but larger commercial broadcaster royalties had remained unresolved.
Terrestrial radio broadcasters are not subject to copyright royalty fees for radio play because it is said to be free promotion for the artists and labels.
