Net radio grabs olive branch from royalty police

Web radio may survive after all.

Today, America's online radio royalty police - aka SoundExchange - agreed to cap per channel fees at $50,000 for each individual broadcaster, a big win for sites like Yahoo! and Live365 that serve up thousands of channels to listeners across the web.

SoundExchange continues to haggle over further changes to the new royalty rates issued by the U.S. Copyright Royalty board this spring - rates that threatened to bring down the entire industry - but broadcasters are confident the two sides can ultimately reach a compromise.

“We are encouraged by today’s announcement,” said Jake Ward, a spokesperson for SaveNetRadio, a coalition of internet broadcasters including everyone from Yahoo! to WebRadioPugetSound. “This agreement is a clear sign of progress in the ongoing negotiations between webcasters and SoundExchange and a very good first step toward a viable solution."

In March, the Royalty Board laid down new rules that would require broadcasters to pay $0.0008 per song per listener. That's retroactive to 2006, and by 2010, the base rate would jump to $0.0019. Plus, the board called for a $500 per channel minimum royalty.

The new rates were due to kick in on July 15, but as broadcasters protested on Capital Hill, SoundExchange - the organization charged with collecting the new royalties - held off on collection in order to negotiate a compromise.

On Tuesday, SoundExchange said it would reduce per listener royalties for smaller broadcasters, but several have already rejected the offer, saying it still prevents them from staying in business.

Two days later, its cap on the $500 per channel minimum has been met with open arms, but SoundExchange has included two conditions: webcasters must provide the organization with comprehensive records of songs being broadcast, and the Digital Music Association, which represents many broadcasters, must work with SoundExchange to "evaluate" what's known as "streamripping," the practice of recording songs as they're broadcast over the net. ®