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SoundExchange relies on DMCA to shutter Webcaster

SWCast was five years late paying royalties, so by waving the DMCA before its ISP, SoundExchange was successful in taking the Webcaster offline.

Illegal file-sharing services aren't the only ones getting kicked off the Internet for failing to compensate artists.

SWCast Network, a company that hosted a platform for Internet radio stations, was recently taken offline for violating the Digital Millennium Copyright Act (DMCA). The company was accused by SoundExchange, a nonprofit that collects royalties on behalf of the music industry, of failing to compensate them since 2005.

Citing the requirements in the DMCA, SoundExchange requested that SWCast's bandwidth provider cut off service to the Webcaster. SWCast went dark two weeks later, on April 17. This was the first time in SoundExchange's eight-year history that it has sought to get a Webcaster booted off the Web, said spokeswoman Laura Anderson.

The true victims of the shutdown appear to be SWCast's customers. The company advertised that for a monthly fee, managers there would pay all the royalties associated with broadcasting music over the Web. According to SoundExchange, SWCast wasn't doing that, at least with regards to that collection society.

Randall Krause, SWCast's CEO said he couldn't discuss the situation in detail per his attorney's advice, but did say his company was working on a resolution with SoundExchange. Krause has moved to a new ISP but has not resumed Webcasting operations.

One conspicuous question is why would SoundExchange wait for so long to pull the plug if SWCast was so behind in payments?

Anderson said that the vast majority of Webcasters who fall behind eventually come back into compliance. SWCast was an exception. SoundExchange execs kept up a dialogue with SWCast until the operator stopped responding to their messages two years ago, according to Anderson.

To get caught up, SWCast must come up with $300,000, plus late fees. The minimum royalty rate for each Web radio station is $500 per year. The fees max out at $50,000 per year and SWCast is six years behind.