Webcasters Keep on Streaming

Webcasters remained on the air Monday, a likely indication that negotiations
over streaming royalty rates between Internet radio stations and the music
industry are moving into high gear.

Webcasters originally claimed the July 15 deadline for paying new rates would
force them off the air, but Jake Ward, a spokesman for SaveNetRadio, said
Monday he was unaware of any stations pulling the plug on their streams.

“The negotiations are proceeding,” Ward said.

According to the Digital Media Association (DiMA), which represents large
webcasters such as AOL, Pandora, Yahoo and Live365, webcasters hope to meet with
SoundExchange, which collects royalties for music labels and artists, Tuesday
or Wednesday in Washington, D.C., or New York City.

Over the weekend, DiMA sent a letter to SoundExchange accepting an offer to
cap per-channel fees at $500 per channel or a maximum of $50,000 annually
through 2010. SoundExchange originally proposed no total cap.

“DiMA appreciates SoundExchange’s acknowledgement that the minimum fee issue
is critical to our member companies,” DiMA Executive Director Jonathan Potter
said in a statement. “With the minimum fee issue off the table, our companies
are hopeful that we can quickly meet with SoundExchange to negotiate a fair
royalty rate that will support a sustainable business environment for Internet

Last week, after SoundExchange offered to cap
the minimum per-channel fee, John Simson, executive director of the group,
said, “We believe that this minimum fee proposal addresses webcasters’
concerns about the minimum fee affecting webcasters with hundreds or even
thousands of stations.”

What’s still in dispute is the actual royalties webcasters pay to stream
music. As announced in March by the Copyright Royalty Board (CRB), the new
rates for commercial and for larger non-commercial webcasters are based on a
pay-per-play rate of $.0008 for 2006, $.0011 for 2007, $.0014 for 2008, $.0018
for 2009 and $.0019 for 2010.

“We do expect commercial webcasters like Yahoo and AOL to pay the new royalty
rates set by the CRB due July 15,” Simson said last week. “It is essential
that recording artists and content owners receive full and fair compensation
from the webcasters making use of their creative works.”

But after a Thursday jawboning session called by Rep. Ed Markey, chairman of
the House Subcommittee on Telecommunications and the Internet, Simson told the
Radio and Internet Newsletter (RAIN), “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 added, “That’s just so long as they’re continuing to pay under the
license they had.”

Simson also said that although small webcasters have not officially accepted
SoundExchange’s May offer, which would
effectively keep their streaming fees at 2002 rates, “we continue to work with
small and noncommercial webcasters and hope that we will be able to resolve
our issues as soon as possible.”

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