Net radio dealmakers to resume talks this week

New fees don't appear to have stopped many Webcasters from silencing their streams yet, but they're still counting on a formal compromise with the music industry.

Anne Broache Staff Writer, CNET News.com
Anne Broache
covers Capitol Hill goings-on and technology policy from Washington, D.C.
Anne Broache
3 min read

July 15, the start date for new and retroactive royalty payments by Internet radio DJs, has come and gone without any apparent catastrophe, thanks in part to last-minute signs that Webcasters may be edging closer to harmony with the music industry.

The consensus among the small and larger Webcasters I've been surveying Monday seems to be that nothing much has changed in their operations--for now, at least. Further unscientific checking of Internet radio streams available at individual Web sites and through Apple's iTunes drove me to a similar conclusion: from NorCal hip-hop to office-friendly Top 40 to Christian metal, what I've been hearing is business as usual.

And in case you missed it this weekend, public broadcasters and royalty-collection body SoundExchange have reached a temporary accord that should allow public radio's music stream Webcasts to remain unchanged for at least the next three months while further talks continue.

That's not to say there has been any mass return of the hundreds of low-budget Webcasters who have reportedly taken their streams offline since the new fees were announced. Or that changes won't be necessary in the near future for stations that remained up and running.

Negotiations are expected to pick up again this week among various Webcasters and SoundExchange. While that process plays out, SoundExchange has said it expects Net radio outfits to follow the rules and pay what they owe--although it has also presented a few alternatives, including an offer to small broadcasters which, if accepted, would not raise their required payments above historic levels.

SoundExchange is continuing to receive new payments from Webcasters, spokesman Richard Ades said in a telephone interview Monday, although he declined to specify from whom or how much they entailed.

The Digital Media Association, which represents larger Webcasters, has requested a meeting with SoundExchange at a yet-to-be-determined location (either New York City or Washington) on Tuesday or Wednesday. DiMA said representatives from six major Webcasters--RealNetworks, Pandora, Yahoo, MTV, AOL and Live365--planned to attend.

At issue for the companies is the level of royalty fee increases set by a federal panel called the Copyright Royalty Board, which cover the time period between 2006 and 2010. For larger Webcasters, the fee increases could raise their required payments by as much as 300 percent, while for smaller outfits, the fees could climb by as much as 1,200 percent, according to the advocacy group SaveNetRadio, which opposes the new requirements.

In recent days, DiMA and SoundExchange have also been attempting to reach agreement on another point of contention in the rules: a minimum $500 "per channel" payment justified as necessary to cover SoundExchange's administrative costs. Large Webcasters had argued that without a cap on those fees, services that allow users to create thousands of distinct "channels" would owe more than a billion dollars in such fees in the first year alone.

Over the weekend, DiMA said it sent a letter to SoundExchange accepting a recent offer to cap the fees at $50,000 per company per year. The organization said it would also investigate whether it's necessary to implement stricter safeguards against "streamripping"--that is, converting Webcast music streams into more permanent digital libraries. But the deal is not yet final, as a number of other issues still needed to be worked out, SoundExchange's Ades said Monday.

On the small Webcaster side, attorney David Oxenford said Monday that his clients--which include Accuradio, Radio Paradise, Radioio, Digitally Imported Radio, and 3wk Radio--are still streaming music as usual. They are continuing their negotiations with SoundExchange on a more informal path, with ongoing conversations but no formal meetings or timetable scheduled, he added.

Any agreement with SoundExchange that ultimately emerges--involving his clients or anyone else--would have to be ratified by the copyright panel or another governmental body, Oxenford said in a recent blog entry.