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Royalties deal lets internet radio play on

Copyright compromise reached

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An agreement has been reached to help ensure the future of internet radio by warding off potentially devastating copyright-royalty rate hikes.

The deal is between SoundExchange, a nonprofit royalty collection and distribution organization associated with the Recording Industry Association of America, and three small internet-radio webcasters: radioIO, Digitally Imported, and AccuRadio.

The terms of the agreement were compromises two years in the making.

In March of 2007, the US Copyright Royalty Board dismissed arguments made by the International Webcasting Association and others and instituted a royalty rate structure that was decried by observers such as the Radio and Internet Newsletter as being so weighted toward copyright holders that it would put most music-providing webcasters out of business.

Today's agreement backpedals significantly from the 2007 proposal, and is legally binding under the Webcaster Settlement Act of 2008 passed by the US Congress last year and recently updated.

Under the settlement, large commercial webcasters will pay up to 25 per cent of their revenue to copyright holders - a far cry from the 70 per cent or more that would have resulted from the earlier proposal.

Smaller webcasters will pay a fee derived from a calculation based on either a percentage of their revenue or their expenses. A detailed explanation of the terms of the agreement can be found in a posting on the SoundExchange blog.

Although the scope of today's agreement is specific only to the three aforementioned small webcasters, others are expected to quickly sign on. Jonathan Potter, executive director of the online-media trade group Digital Media Association (DiMA), said in a statement: "We are pleased that today's royalty agreement... will provide some relief from the crushing royalties that were imposed by the Copyright Royalty Board."

He continued: "DiMA anticipates that some of our members will take advantage of this new license." But that "some" may grow to "most" as both small and large webcasters examine the deal and consider their limited options.

One top-of-mind internet radio group, Pandora Media, appears ready to jump on board. The Associated Press quotes Pandora's founder, chief strategy officer, and Cat Stevens fan Tim Westergren who said: "For us, it's hard to overstate how significant this is. It was either this or an ugly alternative." ®

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