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No relief for Internet radio

April 16, 2007 |  2:20 pm

Soundexchange A three-judge panel within the Copyright Office just rejected a request from online broadcasters to reconsider its March 2 decision to hike royalty rates. That increase, which applies retroactively to webcasts from 2006, is particularly threatening to public broadcasters and small commercial Webcasters, which lost the discounts they enjoyed under the previous royalty regime, and customized radio stations, which could be flattened by new minimum payments per channel. According to the Copyright Royalty Board, "none of the moving parties have made a sufficient showing of new evidence or a clear error or manifest injustice that would warrant a rehearing."

The "manifest injustice" seen by small webcasters is the shift from a percentage of revenue model to a flat fee per song played, which puts a lot of stress on start-ups trying to build an audience. The battle probably will continue with more appeals. In the meantime, though, two top officials at SoundExchange, the agency that collects royalties from Internet radio stations for labels and performers, made conciliatory noises in a press release. “Our artists and labels look forward to working with the Internet Radio industry -- large and small, commercial and non-commercial -- so that together we can ensure it succeeds as a place where great music is available to music lovers of all genres,” Executive Director John Simson said. Added Michael Huppe, General Counsel of SoundExchange, "It is now time to move forward with business. It’s in everyone’s best interest to ensure a vibrant and thriving marketplace for Internet Radio and we intend to work with webcasters towards achieving that goal.” Huppe is certainly right on two things: Internet radio is a business, and his clients have a huge stake in its success. The question is whether they'll make concessions on rates in order to keep more webcasters in operation, or if they'll try to maximize revenue by pushing rates as high as the larger broadcasters can afford.

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