SoundExchange Wants DRM for Webcasts
As negotiations between webcasters and the SoundExchange royalty collection agency continue even on this, the day when payments under the new royalty rates are due, it's worth taking a closer look at what SoundExchange says it wants from webcasters.
Context & Ripple Effects
This story sits at the end of a four-month squeeze on internet radio. In March, the U.S. Copyright Royalty Board sided with SoundExchange over webcasters, adopting per-performance rates Techdirt framed as designed to kill webcasts; by May the industry floated a separate deal for small webcasters as the math proved untenable for smaller operators.
Three days ago SoundExchange blinked, saying it would not enforce the new-rate payments that came due this Sunday — a short-term reprieve, not a settlement. What is now clear from these negotiations is that SoundExchange is asking for more than money: it wants copy protection built into webcast licenses, turning a rate fight into one over how streaming technology itself must work.
First-order effects
- Webcasters sitting at the table with SoundExchange now face a two-front demand — per-performance royalties plus a DRM mandate — meaning even a discounted rate could carry compliance and interoperability costs.
- The non-enforcement window gives webcasters breathing room on payments due July 15 under the Copyright Royalty Board's rates, but no certainty about what terms they will ultimately sign.
Second-order effects
- If DRM lands in the standard webcast license, streaming-platform and player developers would have to build copy protection into their products to keep carrying licensed music, raising engineering costs across the ecosystem.
- A technology mandate attached to a compulsory-style license would set a precedent other rights holders could press for in future digital-music negotiations, hardening SoundExchange's leverage beyond the rate card.
Third-order effects
- The episode points toward royalty collection bodies using licensing terms — not just rates — as a lever to shape how online music distribution works, pulling copy-protection policy out of legislation and into private negotiations.
- For small webcasters, whose viability already depended on the May carve-out discussions, layered technical requirements risk consolidating net radio around operators large enough to absorb both royalty and compliance burdens.
The trend: Digital music licensing is expanding from setting prices to dictating technology, with collectors like SoundExchange treating DRM as a negotiable term alongside per-performance rates.