Internet Radio Saved?

Internet RadioWith the July 15th deadline for the new internet radio royalties fast approaching, webcasters were starting to despair. But they are breathing easier today. Yesterday, at a congressional hearing, Jon Simson (executive director) of SoundExchange promised that the new rates would not be enforced (report via Internet radio will stay online as the two sides negotiate new rates.

One of the major issues with the new rates has been the per station minimum fee of $500. This would have been a HUGE expense for such webcasters as Pandora, Live365, and other multicasters who allow custom stations for every listener. These minimum fees are now off the table, and will be replaced by a system in which per-station minimums will be capped at $50,000 per year.

While this may all sound like good news, some of the wording I’m reading in conjunction with the announcement is somewhat troubling. Take this statement for instance.

SoundExchange and the webcasters that were part of the Copyright Royalty Board hearings are going to have another chat about the rates.

Does this mean that webcasters who were not a part of CRB hearing will still have to pay the new rates (minus the minimum fees)? Or, spared that, will they be invited to participate in this new round of rate negotiations?

One thing that seems clear is that the Copyright Royalty Board has cut itself out of the loop. The board’s refusal to a rehearing has left the continuing process to SoundExchange and the webcasters directly. If the two parties can go forward free of the royalties being collected, they may be able to come to some sort of agreement that works for everyone. After all, webcasters do need music to play, and artists need someone to play their music so fans will hear it. It seems there should be a way to work this out that benefits everyone involved, including the consumer.

Congress, it seems, will be watching the negotiations as they unfold. And the current situation does provide Congress with the time to debate the Internet Radio Equality Act (links to pdf), which would set royalties at 7.5% of revenue for webcasters, a rate very much like what they operate under presently.

Is internet radio saved? Not yet. Not until the negotiations produce a royalty rate that works in the real world for both parties. But it seems internet radio won’t die this weekend, as had been the fear prior to yesterday’s announcement.