Small webcasters offered royalty deal
WASHINGTON - Some small Internet radio broadcasters are rejecting a new offer from a music industry group to pay discounted royalty rates for streaming music online through 2010. — SoundExchange, the music industry group that collects royalties …
Context & Ripple Effects
This offer is the third move in a year-long standoff over internet radio royalties. In March 2007 the U.S. Copyright Royalty Board sided with SoundExchange and rejected webcaster appeals on the new per-performance rates (the CRB ruling), and by July SoundExchange had agreed not to enforce the new rates at the payment deadline (that partial reprieve) while negotiations continued.
SoundExchange had already floated a discounted deal for small webcasters in May 2007 amid an outcry over the fee hikes; this August offer extends discounted rates through 2010. Notably, SoundExchange has confirmed it wants DRM written into licensing terms, and while the AP reports some small broadcasters rejecting the offer, that rejection claim is itself disputed — so where small webcasters actually land remains unsettled.
First-order effects
- Small internet radio operators must choose between the discounted SoundExchange rates through 2010 and the CRB-set per-performance rates that drove the outcry — a choice that decides whether many can keep streaming at all.
- SoundExchange gets a negotiated off-ramp that keeps royalty revenue flowing from the small-webcaster tier without relying on Congress or further CRB intervention.
Second-order effects
- Larger webcasters watching this negotiation gain a template: if SoundExchange concedes discounts and softer terms for the small tier, big services have grounds to press for their own direct-negotiated rates rather than the statutory schedule.
- The confirmed DRM demand becomes the deal's choke point — webcasters unwilling to embed DRM in their streams can reject even a discount, pushing both sides back toward the unresolved CRB rates.
Third-order effects
- If negotiated settlements keep superseding Copyright Royalty Board schedules, internet-radio royalties shift structurally from statutory rate-setting to SoundExchange-mediated deals tiered by broadcaster size — making SoundExchange the effective gatekeeper for online music licensing.
- DRM-as-license-condition sets a precedent for music licensing beyond webcasting: rights holders gaining a lever to attach technology mandates to price relief, which platforms of any size would have to weigh against distribution flexibility.
The trend: Internet-radio royalties are moving from Copyright Royalty Board rate-setting toward negotiated SoundExchange agreements scaled to broadcaster size, with DRM terms emerging as the bargaining chip.