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Congress Might Reverse Web Radio Royalties Decision


By: Spacelab Research Staff
Two years ago, I would have laughed at the thought of this even being considered by Congress. Now it looks very possible.

The long battle of Web radio royalties took a new turn last week when Congress introduced a bill called the Internet Radio Equality Act. If passed, it would reverse the schedule for payment hikes approved by the Copyright Royalty Board on March 2nd in favor of a more balanced system of payment, that takes into account everyone involved--artists, labels, SoundExchange, Web radio, and the people who are listening.

The Internet Radio Equality Act would set new rates at 7.5 % of the webcaster's revenue. This is what satellite radio peeps pay like XM and Sirius pay. It would also give webcasters a second payment option to choose, in which they could pay 33 cents per user per hour of sound recordings transmitted. The old option put forward by the Copyright Royalty Board in March would have doubled payment rates from 2006 (retroactively) to 2010, a decision that was lauded as one sure to drive most Web radio stations out of business.

"The illogical and unrealistic royalty rates set by the CRB have placed the future of an entire industry in jeopardy. This bill is a critical step to preserve this vibrant and growing medium, and to develop a truly level playing field where webcasters can compete with satellite radio," said Jake Ward of SaveNetRadio.

OK, that sounds completely like an over-corporate feel good PR quote from the school of cookie cutter PR quotes, but we'll cut him some slack because the underlying message is a good one. It's good for webcasters, it's good for music fans, and it's good for musicians because they'll get more airtime. More airtime means more awareness.

Don't buy the hype that it's bad for musicians because they'll get paid less (i.e. the SoundExchange rhetoric), because SoundExchange could always restructure how much they compensate artists in light of the new reality. First they used musicians as a shield to try to increase royalty payments, now they're acting as if they're ready to throw the artists under the bus because it didn't work.

"This legislation, if passed, would come at the expense of hard-working artists, who, on average, received just $360 each in royalties from webcasting in 2006," said a press release from SoundExchange.

The Internet Radio Equality Act was introduced by Representatives Jay Inslee (D-WA) and Donald Mazullo (R-IL).

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