Online Radio Is Saved; SoundExchange Will Not Enforce New Royalty Rates on Sunday
At today's Congressional hearing about the new rates for online radio that would essentially destroy it (as readers of this blog already know), SoundExchange, which was scheduled to receive the new royalty payments …
Context & Ripple Effects
The reprieve caps a four-month squeeze. In March, the U.S. Copyright Royalty Board sided with SoundExchange and rejected webcasters in its rate decision, and by May the industry body was already floating a deal aimed at small webcasters as the outcry built. With a court declining to postpone the new rates and Sunday's deadline standing, SoundExchange used today's Congressional hearing to announce it would not enforce them.
The story travelled unusually wide for a royalty dispute — TechCrunch, the Washington Post, CNET and Ars Technica all picked it up on the same day — reflecting how existential the per-performance rates looked to independent stations. The Wired companion piece frames it as only a partial reprieve, since the rates themselves remain on the books.
First-order effects
- Webcasters facing the new per-performance rates get an immediate stay of execution: no payments are collected Sunday, so stations keep operating past the deadline they were preparing to shut down for.
- SoundExchange trades short-term revenue for positioning, arriving at the hearing as the conciliatory party while retaining the CRB-endorsed rate schedule as leverage.
Second-order effects
- Congress is now the decisive venue: with the courts unwilling to intervene, pressure shifts toward a legislative fix or negotiated settlement rather than the CRB's numbers.
- The May offer to small webcasters becomes the template for broader negotiations, splitting the webcaster coalition between those who might take a deal and those holding out against the rate structure itself.
Third-order effects
- If enforcement pauses become the standard response to public outcry, internet radio royalties effectively get set through political negotiation and lobbying rather than by the Copyright Royalty Board's process — weakening the board's role as final arbiter.
- A pattern of deadline-then-retreat also teaches both sides that brinkmanship works, making each future rate cycle likelier to run to the wire before any compromise.
The trend: Internet radio royalty-setting is migrating from the Copyright Royalty Board's rulings toward Congressionally brokered deals, with SoundExchange's enforcement discretion as the swing lever.