Copyright Royalty Deal Saves Online Radio Stations
On Tuesday, a group of online radio stations reached an agreement with copyright holders to stop a crippling increase in copyright royalty rates.Â
The deal was struck after two years of negotiations.
In March 2007, the federal Copyright Royalty Board made dramatic increases in the fees Internet radio stations pay record labels and artists. The increase in copyright payments meant many online stations would lose up to 70 percent of their revenue.
Pandora Media, one of the most popular online radio services, said the new agreement likely saved their business.
"For us, it’s hard to overstate how significant this is," Tim Westergren, founder of Pandora, told the AP. "It was either this or an ugly alternative."
SoundExchange, a nonprofit that collects royalties for artists and copyright holders, struck Tuesday’s revenue-sharing deal with three smaller online stations: radioIO, Digitally Imported and AccuRadio.
According to Westergren, Pandora plans to agree to the new terms also.
Jonathan Potter, of the Digital Media Association, believes other online radio stations will also agree to the deal.
According to the agreement, large online stations will pay copyright owners up to 25 percent of revenue due, or pay a “per-performance” rate that is below the rate set by the Copyright Royalty Board.
Smaller online stations will pay either a percentage of expenses or a percentage of revenue.
John Simson, executive director for SoundExchange, says the deal will give online stations the opportunity to "flesh out various business models" and allow copyright holders to "share in the success their recordings generate."
Lawmakers were pleased to hear about the deal.
Internet radio companies operate under a government license, so any deal had to be approved by Congress.  Before the deal was reached, Congress had passed legislation making any deal reached between the parties legally binding.
SoundExchange has already struck online royalty agreements this year with the National Association of Broadcasters and the Corporation for Public Broadcasting.
Traditional AM and FM radio stations are exempt from copyright royalty payments, because the airplay is thought to be free promotion for artists.
The broadcasters will be subject to the new agreement if they choose to stream music over the Internet.
—
On the Net: