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Net radio saved from certain death

Tentatively. Temporarily

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There's been a stay of execution after all. Just hours after a federal appeals court rejected efforts to postpone the arrival of new royalty rates threatening to bring down internet radio, webcasters reached a tentative agreement with the recording industry that will keep them online - at least temporarily.

With a new rate scheme from the U.S. Copyright Royalty Board due to kick in on Sunday, SoundExchange, the nonprofit organization charged with collecting online radio royalties, agreed before Congress to delay enforcement of the scheme as it continues to seek a compromise with broadcasters, Wired reports.

That doesn't mean broadcasters are off the hook, but it gives them time to negotiate new rates. "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," SoundExchange executive director John Simon told the Radio and Internet Newsletter. "That's just so long as they're continuing to pay under the license they had."

"As reported, this seems to have been the first in what we hope is a series of productive conversations that will ultimately resolve this issue fairly and reasonably," says Jake Ward, a spokesperson for SaveNetRadio, a coalition of webcasters that's been lobbying Congress to repeal the new royalty scheme.

According to Ward, the new scheme amounts to a 300 per cent rate increase for large webcasters, 1,200 for smaller stations. It requires broadcasters to pay $0.0008 per song per listener - retroactive to 2006. By 2010, the base rate will jump to $0.0019. The new scheme also calls for a minimum $500 fee per channel - a big threat to sites like Yahoo! and Live365 that broadcast hundreds of stations.

Today, SoundExchange issued a proposal that would cap the $500 per channel minimum at $50,000 for large webcasters - provided that these broadcasters supply "more detailed reporting of the music that they play and work to stop users from engaging in 'streamripping,'" according to a statement from SoundExchange. Streamripping is a means of recording songs streamed over the internet.

Yesterday's news also gives webcasters time to push a law through Congress that permanently changes the rate scheme. The Internet Radio Equality Act - a bill with 128 co-sponsors in the House - seeks to introduce a royalty model mirroring the one used for satellite radio. Rather than paying per user per song, broadcasters would pay based on revenue.®

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