updated 10:15 am EDT, Fri July 13, 2007
Radio Royalties Passed Up
Licensing firm SoundExchange won't necessarily enforce the royalty rates for Internet radio that take effect Sunday, company director Jon Simson revealed late Thursday. While the organization had successfully blocked an appeal in court to delay the schedule for the royalties, Simson promised at a US Congressional hearing that online stations will have at least a grace period while SoundExchange determines more affordable rates. One guaranteed change will drop the minimum fees that would have been applied even to broadcasters who needed a slight amount of licensed music, according to one source familiar with the hearings.
The news represents a sudden turnaround from SoundExchange's previous hardline approach, which would have forced even small broadcasters to pay fees for every listener of every licensed song, including retroactive payments dating back to the year before. Many large public stations such as Santa Monica-based KCRW had complained that the fees would eliminate many of their revenues or even force them off-air.
But the change in attitude is due largely to this reaction, according to Tim Westergren, founder of custom Internet radio stream company Pandora. "This is a direct result of lobbying pressure," he said. "So if anyone thinks their call didn't matter, it did. That's why this is happening."
A law set to counter the increase in royalty rates, known as the Internet Radio Equality Act, is still under consideration in Congress and would essentially charge flat rates for all stations.