Webcasters and SoundExchange Shake Hands

Posted by: Olga Kharif on August 23, 2007

It looks like Webcasters got exactly what they asked for. On Aug. 23, music industry rep SoundExchange and the Digital Media Association (DiMA), representing Web radio stations, shook hands over an agreement that will establish a $50,000 cap on royalty payments any given radio service has to make for spinning songs.

The agreement is a huge win for large Web radio companies like Yahoo Music and Pandora which, under earlier SoundExchange proposals, would have had to hand over millions in royalties. The agreement should allow Yahoo Music to turn profitable this year, I believe. Indeed, the $50,000 cap is what Webcasters have asked for all along.

Earlier this week, SoundExchange made yet another peace offering: It offered favorable royalty payment terms to smaller Webcasters. Taken together, the two proposals mean that the long-standing dispute between the music industry and Web radio is drawing to a close. Web radio listeners can breathe a collective sigh of relief.

It looks like, at the end, Webcasters — whose revenues, small today, are growing fast — got a very good deal.

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Reader Comments

Ghosty

August 24, 2007 08:00 AM

As an ex-Internet broadcaster who has been thinking about getting back into the business after five years, this is very very good news.

Charles-A. Rovira

August 24, 2007 08:17 AM

Looks like the bullying tactics paid off. SoundExchange gets to extort $50,000 from each Webcaster.

Yes, since the musicians have to actually find out how much they're owed, by themselves, SoundExchange can always claim a much lower figure and pocket the difference.

This is a crock.

SoundExchange is extortion and profiteering, pure and simple, and should be illegal, but the laws reflect what we do to live with each other, not what is right, and musicians are so poor that they don't mind existing with parasites.

Paul Kamp

August 24, 2007 09:24 AM

The way this is phrased is not accurate. What was agreed to was that each service, i.e. Yahoo or Pandora, would have their minimum per station royalties capped at $50,000. This does not cap Yahoo's royalties at $50,000.

For example, under the current CRB rules Pandora would have to pay $500 per station streamed. Since Pandora produces a special station for each member that would mean that they would have to pay $500 per year for each member plus the associated streaming royalties for listener hours. Under these terms Pandora would have to pay $50,000 for the first hundred members and $500,000 for the first 1000, etc.

All that was agreed to was to cap the amount of the minimum royalty for companies/services that provide multiple streams at $50,000. What is still under discussion is the amount that would be paid for the actual streaming per station. At this point in time very high CRB rates apply. Note, I use the term high in comparison to the rates paid by terrestrial and satellite broadcasters.

At the end of the day, all the internet broadcasters want is "broadcast neutrality" where they would pay the same rate to broadcast content as other transmission mediums.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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