Online Radio Is Saved; SoundExchange Will Not Enforce New Royalty
Rates on Sunday.
By Eliot Van Buskirk ..July 12, 2007 | 7:35:30 PMCategories:
At today's Congressional hearing about the new rates for online
radio that would essentially destroy it (as readers of this
know), SoundExchange, which was scheduled to receive the
new royalty payments on Monday morning (since the enforcement
date falls on a Sunday), made a startling statement.
The SoundExchange executive promised -- in front of Congress
-- that SoundExchange will not enforce the new royalty rates.
Webcasters will stay online, as new rates are hammered out.
I just spoke with Pandora
founder Tim Westergren, who expressed relief that Pandora wouldn't
have to shut down on Sunday in response to the new rates. He
said, "It was getting pretty close. I always had underlying
optimism that sanity was going to prevail, but I was beginning
He said everyone who called their Congress person about this
should feel that they had an effect on the process:
"This is a direct result of lobbying pressure, so if anyone
thinks their call didn't matter, it did. That's why this is
happening." The flyer
DiMA distributed to Congress today probably helped a bit too,
but overall, it appears Congress intervened due to pressure
from web radio listeners.
Funnily enough, Westergren told me this mere hours after a
representative of SoundExchange said
that the new rates are "etched in stone." Twice. Evidently
Westergren had more to say, lending insight into a process
that was largely opaque to non-participants. Apparently, the
per-channel minimum fees mandated by the Copyright Royalty Board
were never taken very seriously by those involved. They've now
been taken off the table completely, saving Pandora, Live365,
and other multicasters from their most imminent threat.
"No one thought those per station fees were remotely rational.
It only makes sense that they're being taken off the table."
As for the Copyright Royalty Board? They're entirely cut out
of the process, having set the rates and then refused a rehearing.
Going forward without the royalties being collected, SoundExchange
and webcasters will negotiate a new royalty rate with Congress
looking over their shoulder -- "and last but not least,
the public looking over Congress's shoulder." Alternatively,
Congress now has time to consider the Internet Radio Equality
Act, which would set webcaster royalties at 7.5 percent of revenue
and allow them to continue operating pretty much as they have
Either way, this is a big win for webcasters and their listeners.