Why The New Webcasting Rates Are A Death Sentence For Webcasters
When the announcement came out this week that webcasters had somehow “come to an agreement” with SoundExchange over webcasts, what was unbelievable was that many presented this as a “victory” for webcasters.
Context & Ripple Effects
This week's 'agreement' between webcasters and SoundExchange is the endpoint of a fight that began in March 2007, when the Copyright Royalty Board sided with SoundExchange on rates widely described as built to kill internet radio — Techdirt's own framing in its RIAA-pushed royalty rate story.
Since then SoundExchange has traded concessions for survival: a $50,000-per-year royalty cap per webcaster agreed in August 2007, a dropped DRM requirement, and discounted rates through 2010 that small broadcasters opposed anyway as merely a reprieve. That history explains why this week's deal being called a 'victory' strikes critics like Techdirt as a surrender: every negotiation since 2007 has started from the rate schedule webcasters already called fatal.
First-order effects
- Webcasters now operate under a royalty structure negotiated with SoundExchange that scales with listenership rather than revenue, meaning growth increases costs faster than ad income — the direct burden Techdirt calls a death sentence.
- SoundExchange consolidates its position as the mandatory collection point for internet radio, with the agreement legitimizing rates that were originally imposed by the Copyright Royalty Board over webcaster objections.
Second-order effects
- Independent and small webcasters face the same choice they faced under the 2007 discounted-rate offers: accept unsustainable per-play economics or shut down, pushing listening toward larger licensed services that can absorb the fees.
- The pattern forces any future entrant into internet audio to price SoundExchange royalties into the business model from day one, tilting competition toward well-capitalized players and away from hobbyist and niche stations.
Third-order effects
- If rate-setting keeps running through negotiations where SoundExchange represents label interests against a fragmented webcaster side, internet radio's cost floor gets set by the party that benefits from it staying high — a structural disadvantage against broadcast radio, which pays no equivalent per-play performance royalty.
- Each successive 'deal' since the Copyright Royalty Board's 2007 rejection of webcasters has normalized the original punitive rates as the baseline, pointing toward a licensing regime where independent streaming survives only at the discretion of periodic concessions.
The trend: Internet radio licensing is drifting from regulator-imposed rate schedules to recurring SoundExchange-negotiated settlements that entrench the same economics webcasters first rejected in 2007.