SoundExchange is an organization that collects royalties for many companies, including both RIAA members and independent labels.
Large webcasters technically have individual channels for each user, making their royalty responsibility under the recently passed Copyright Royalty Board (CRB) webcasting rates, would be more than the revenue generated by their service. The new rates set a $500 minimum payment per unique channel.
The rates are based on an entertainment industry proposal, which the CRB essentially passed as submitted. Not surprisingly they demonstrate a clear disregard for how online radio's business model works. It's really just another example of the industry reaching out for any source of revenue they can as CD sales fall.
They already have a royalty model established with satellite radio services that exceeds what they get from terrestrial broadcasts. The webcaster rates go even further, and the music industry would like to extend them to terrestrial broadcasts.
The new deal with SoundExchange will limit the minimum fees to only apply to the first 100 channels from a given webcaster.
SoundExchange has an incentive to get a deal done soon. Congress is returning from its August recess soon, and several members of Congress have threatened to push forward on the Internet Radio Equality Act if nothing has been worked out.
Source: Ars Technica
Written by: Rich Fiscus @ 25 Aug 2007 6:50
