Smaller web radio stations not happy with royalty deal
While this week’s negotiated deal for online radio royalty payments may have saved Pandora, smaller stations may not come off as well. The chairman of one network has complained a minimum $25,000 annual fee could make many stations financially unviable.
Under the deal with music industry representative Soundcast, which is expected to get Congressional approval soon, stations which bring in less than $1.25 million a year are exempt from paying per-song royalties. Instead they pay a proportion of their revenues or, in some cases, a fee based on their total other expenses.
However, the Soundcast deal sets fees at a minimum of $25,000 regardless of a site’s size. That would make it a lot tougher for smaller stations, particularly those which specialize in niche music genres.
Johnie Floater of Live 365, an online radio aggregation service representing 6,000 stations, says the deal should be rewritten to allow independent music station to band together and pay a combined fee. He doesn’t suggest a specific figure, but says that while it should obviously be more than the $25,000, it must be much less than $25,000 a station. (Naturally Floater has some degree of self-interest here as Live 365 is exactly the type of administrative collaboration he’s talking about.)
Despite Floater’s warnings, not all small stations will be harmed by the deal. Any station can choose not to take part in the deal and instead pay the prevailing Copyright Royalty Board rates. For non-commercial stations this would involve a flat $500 annual fee which covers up to 159,140 aggregate tuning hours per month: that’s the combined hours of listening of all users. Amateur and hobby sites exceeding this limit then pay per-listen royalties at the higher rates which would have affected all sites without this week’s Soundcast deal.
Meanwhile all commercial stations have the right to simply pay the higher rates with a minimum $500 fee rather than sign up to the Soundcast deal (complete with the minimum $25,000). Given the rates, that would work out cheaper for any station whose audience listens to a combined 13.1 million tracks a year. So while it’s certainly arguable that it’s unfair the smallest stations face the heftiest per-track royalty hikes, it’s a gross exaggeration to say they will all be wiped out overnight.
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