SoundExchange Gives Small Broadcasters A Break - At least for a couple more years ... but they don't want it
After much lobbying and media coverage about the negative effect of higher royalty rates on small Internet radio broadcasters, SoundExchange put a halt on realizing the rates until a better deal could be worked out.
Context & Ripple Effects
The royalty fight has been running all year: SoundExchange first offered small webcasters a discounted rate back in May, then pulled back from enforcing the new CRB rates entirely with its July non-enforcement announcement as payments came due. The pattern is one of repeated standoffs followed by temporary truces rather than a settled rate structure.
Today's halt extends that approach — and comes alongside confirmed reports that SoundExchange has dropped its DRM requirement from the terms, though per Ars Technica's same-day coverage webcasters still oppose the deal as written. The sticking point is no longer just price; it is the caveats attached to the discounted rates through 2010.
First-order effects
- Small Internet radio broadcasters get immediate cash-flow relief: the higher per-performance rates do not hit their books while negotiations continue, keeping marginal stations alive through the standoff.
- SoundExchange trades enforcement leverage for time — it keeps small webcasters inside its licensing system rather than pushing them off the air or into unlicensed operation.
Second-order effects
- Larger webcasters without access to the small-broadcaster discount face the full rates sooner, widening the cost gap between big and small operators and pressuring mid-sized services to seek their own negotiated terms.
- Every extension of the truce weakens the CRB-set rate card as the operative benchmark: if SoundExchange keeps negotiating around it, future rate-setting loses credibility with both sides.
Third-order effects
- If the pattern holds, Internet radio royalties move from statutory rate-setting toward negotiated, tiered deals struck directly between SoundExchange and broadcaster classes — with DRM and reporting requirements as bargaining chips rather than fixed license conditions.
- A two-year discount window through 2010 effectively defers the structural question of whether ad-supported small webcasting is economically viable at per-performance rates, leaving the answer to whoever holds negotiating power when the window closes.
The trend: Internet radio licensing is shifting from statutory rate cards to repeatedly renegotiated class-based deals, with SoundExchange using enforcement pauses to keep webcasters at the table.