The House of Representatives has unanimously passed the bill that will greenlight an agreement between Internet Radio companies and SoundExchange, the nonprofit organization that collects royalties for the record labels and the RIAA.
In March 2007 the federal Copyright Royalty Board negotiated new royalty rates for digital broadcasters that would have increased the rates to levels where the Internet Radio companies could no longer stay in business. Recently however, before the new rates come into effect, the two sides have been negotiating a deal and the deal seems imminent. There is however, one problem, and that is the fact that Congress is preparing to adjourn until the elections and “because Internet radio companies operate under a government license, any final agreement needs congressional authorization.”
The new bill that passed means the sides can continue negotiatons until February 15th of next year and makes sure that any deal agreed upon while Congress is in recess is legally binding.
Earlier this week, the most popular of Internet Radio sites, Pandora made a call for help asking to get the bill passed through and it seems to have worked. Tim Westergren, founder of Pandora said that if the rates go up then over $17 million of Pandora’s estimated $25 million revenue will go to paying off royalties.
Result for: radio companies
Last month we reported that SoundExchange had killed off Internet radio by upping royalties to levels that cannot be sustained by any company. Pandora, the largest and most popular of current Internet radio companies, admitted that day that they are most likely going to have to shut down if the royalty charges are not lowered.
Yesterday we received an email from a Pandora representative which was very interesting and I will post in its entirety later in this article. In the email, the rep says that the RIAA and SoundExchange have come to their senses and are ready to agree to lower royalties to levels where an Internet company can survive and the trade groups can make the profit they want. It appears there is another roadblock however, one being brought forward by the traditional radio broadcasters, most notably Clear Channel Communications. The entire email as we received it:
Hi, it’s Tim from Pandora;
After a yearlong negotiation, Pandora, SoundExchange and the RIAA are finally optimistic about reaching an agreement on royalties that would save Pandora and Internet radio. But just as we’ve gotten close, large traditional broadcast radio companies have launched a covert lobbying campaign to sabotage our progress.
Yesterday, Congressman Jay Inslee, and several co-sponsors, introduced legislation to give us the extra time we need but the National Association of Broadcasters (NAB), which represents radio broadcasters such as Clear Channel, has begun intensively pressuring lawmakers to kill the bill. We have just days to keep this from collapsing.
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