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Ice firming under webcasters

August 23, 2007 |  2:02 pm

Soundexchange Does this sound familiar? SoundExchange, an agency for labels and performers that collects royalties from digital broadcasters, and the Digital Media Assn. just announced that they've reached a deal capping the "minimum fees" webcasters must pay annually for each channel they broadcast. The cap is the same as the one discussed back in July -- $50,000 per year. That time, a tentative agreement fell through when SoundExchange insisted that webcasters stop listeners from recording streams, if technically feasible. In particular, SoundExchange was promoting technology from Media Rights Technologies of Santa Cruz.

The deal announced today leaves more wiggle room on the streamripping issue. According to a press release issued by DiMA, "SoundExchange and DiMA will form a committee to evaluate the issue of streamripping and potential technological solutions to it." In other words, that's a battle for another day. The other condition won by SoundExchange, which has far more practical significance to artists and labels, is that webcasters will have to start reporting every song played, around the clock, beginning in six months. It's more work for webcasters, but the payoff is that the royalties will reflect actual airplay (err, um, webplay), not estimates based on other measures of popularity.

While settling the minimum-fee issue is critical for webcasters that offer hundreds or thousands of customized playlists (think Pandora and LAUNCHcast), there's still the issue of sharply higher royalty rates for mid-size and large webcasters. SoundExchange announced Tuesday that it has offered webcasters with less than $1.25 million in annual revenue (and who meet undisclosed usage limits) the same discount they've had for several years -- instead of paying fees per song streamed, they can pay a royalty equal to 10% to 12% of their annual revenue. Larger webcasters, however, are on the hook for steadily increasing per-song fees that, by 2010, will be more than double what they were last year. Mid-size webcasters complain that they can't sell enough advertising to cover those fees. Those talks are continuing. Stay tuned.

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