Music industry offers deal to small Webcasters
Facing an outcry over imminent royalty fee increases for Internet radio operators, the music industry body that lobbied for the changes has attempted a peace offering. — SoundExchange, the nonprofit group that collects the fees on behalf …
Context & Ripple Effects
In May 2007, SoundExchange — the nonprofit that collects performance royalties on behalf of labels and artists — sits on the winning side of an imminent increase in Internet-radio royalty rates that it lobbied for. The resulting outcry from small webcasters facing rates they say they cannot pay has put the collecting body in the unfamiliar position of negotiator rather than enforcer.
The olive branch reported here, picked up by outlets including Ars Technica, matters because it tests whether SoundExchange can defuse opposition to its rate victory without reopening the underlying structure — and whether small operators will trade protest for a carve-out.
First-order effects
- Small webcasters staring down the new per-play rates gain an alternative negotiated path through SoundExchange instead of the published rate schedule, giving marginal operators a way to keep streaming.
- SoundExchange converts itself from the face of the fee hike into the offer-maker, trading some headline revenue from tiny broadcasters for legitimacy and reduced political heat.
Second-order effects
- A credible small-webcaster carve-out risks splitting the opposition coalition against the rate increases, weakening the broader pushback that larger webcasters are relying on.
- Operators above whatever size threshold defines 'small' remain exposed to the full rates, sharpening a two-tier market in which scale becomes the deciding cost variable.
Third-order effects
- If the pattern holds, US Internet-radio royalties move from uniform statutory rate-setting toward class-by-class negotiated deals, with SoundExchange as gatekeeper over who qualifies for which terms.
The trend: Internet-radio royalty policy in 2007 is shifting from one-size-fits-all statutory rates toward negotiated tiered agreements between SoundExchange and distinct classes of webcasters.