Internet Radio has been saved today, for the time being at least, after SoundExchange signed a deal with radio webcasters.
SoundExchange is the organization in charge of collecting royalties for musicians and the record labels relating to online music.
The deal, settled after 2 1/2 years of very public disputes over proposed royalty increases, will allow Internet Radio to survive. Webcasters will not be forced to pay per-song royalty payments that many webcasters claimed would put them out of business.
According to the LATimes, webcasters can now “choose an alternative rate structure that allows them to pay lower per-song royalties through 2015, or 25% of their revenue.”
“If the rates weren’t resolved, we were sunk. So this is a huge relief,” adds Tim Westergren, founder of Pandora. Westergren adds that Pandora, through its site and iPhone App, has about 30 million registered users.
The company expects to have $40 million USD in revenue for 2009, and could possibly now be profitable next year.
The new royalty deal will start at a per-song rate of 0.08 of a cent per listener per song and will rise to .14 of a cent by 2015. The proposed rates had been .0762 for the first year, and then .19 of a cent for 2010, a gigantic increase.
The LATimes adds that “under the new agreement, large webcasters pay whichever is greater — the per-song fee or the percentage of revenue. Smaller commercial webcasters — those with $1.25 million or less in total revenue — would pay between 10% and 14% of their sales or 7% of their expenses, whichever is greater.”
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Result for: royalty deal
Yesterday SoundExchange and the National Association of Broadcasters (NAB) announced a deal for webcasting royalties. This deal covers only terrestrial radio stations, and not internet-only operations like Pandora. The deadline for SoundExchange to reach a deal with all webcasters (February 15) had already expired, which may mean more action from Congress in the coming weeks.
Or it may mean the courts will have the final word on internet radio royalties. Next month webcasters are scheduled to argue their case in front of a federal judge, appealing a March, 2007 decision by the Copyright Royalty Board (CRB) which created the current situation.
The board was charged with finding a compromise between record label and webcaster royalty proposals. Instead they stunned everyone by signing off on the one sided proposal from SoundExchange, representing the labels.
Result for: royalty deal
While speaking in Des Moines, IA on Monday, Pandora internet radio founder Tim Westergren indicated that he believes webcasters and record label representatives are close to a deal on royalties for internet radio. The comments came at a gathering of Pandora listeners, which you can read more about in a new article here at Afterdawn.
Mr. Westergren took a few minutes to sit down with me and discuss the current state of Pandora and even speculate a little about the future. We also talked about devices that make it possible to listen to Pandora when you’re not sitting in front of the computer, including mobile phones and appliances that connect to both your home network and home stereo.
For more details about our conversation you can read the entire article on our Guides and Articles page.
