The organization will be responsible for collecting royalties from online radio stations such as America Online's Spinner.com or CMGI's iCast, and distributing them to artists and record companies. The Recording Industry Association of America (RIAA) has spent the last several months signing thousands of independent record labels to be members of SoundExchange.
The group was scheduled to launch Oct. 11, but that date has been temporarily postponed, the RIAA said Friday.
The need for this group stems from the passage of the Digital Millennium Copyright Act, which for the first time requires Webcasters to pay royalties. The music industry and technology companies have collectively been unable to come to terms on what this rate should be, and no group is yet officially in charge of collecting these fees. The record industry is the only group that has stepped forward in the United States to create such an organization, but it ultimately must be certified by the U.S. Copyright Office.
As reported earlier by CNET News.com, some in the online and music community are considering a challenge to SoundExchange's right to control the royalty distribution.
These groups, which include trade associations and lobbying groups for Webcasters and independent artists, are concerned that an RIAA-dominated group would not represent the interests of independent artists should there be a conflict between artists and labels.
Sources, however, have said that the SoundExchange board of directors will include artists and representatives from independent labels, as well as major labels.