SoundExchange's dirty dealings

Jun 05, 2007 11:24 pm
From Liz Berg via WFMU Beware of the Blog:
The battle between webcasters and SoundExchange (webcasting royalty collectors) is still raging over royalties. Earlier this year, the Copyright Royalty Board approved a hike in webcasting royalty fees so large that the increase would put many online stations out of business. An enormous backlash erupted from webcasters large and small, commercial and non-commercial, backed by the Save Net Radio campaign. NPR asked the CRB to provide an exception to the rates for non-commercial stations with large online audiences, but this was denied. Congress eventually caught wind of the storm, and wrote up a few bills to nix the CRB's rates, but no further progress has been made. In a surprise move, the CRB pushed the inception of their new rate scheme forward a few months, but as July 15 creeps up, few negotiations have taken place between webcasters and SoundExchange.

The few settlement offers that SoundExchange did offer up to webcasters are, unfortunately, useless to the vast majority of stations that will be affected by the rate hike. I imagine that Congress pressured SoundExchange to work something out, and in return SE wrote up a few PR-driven "deals" to get the Reps and Senators off their asses. Here are the details of SE's bum deals:

1. Small webcasters running on less than $250k/yr will pay 10% of their revenue to SoundExchange, and those with revenue up to $1.25 million will have to pay 12%. Any station with a budget over $1.25 million will be charged as per the CRB's new rate scheme. This sounds like a good deal, until you consider the fact that satellite radio companies XM and Sirius pay the highest royalties out of anybody, and their rate is only 7.5% of annual revenue. And 12% is supposed to be a "deal" for fledgling businesses? Here's the story.

2. SoundExchange offered a "private agreement" to a few NPR-affiliated non-commercial webcasters. They'll be charged a low royalty rate, provided that they don't have a large listenership. If they have more than 200 simultaneous listeners on their stream, the fees increase significantly. Trouble is, if your station wasn't part of the "private agreement", this "deal" doesn't apply.

In the meantime, NPR has filed a court request for an emergency stay on the CRB's new rates. Let's hope that SE comes up with a reasonable compromise for small webcasters and non-commercial stations soon...