Published by Randall Krause on Sunday, January 7, 2007 [Permalink] [Return to Top]
New U.S. Webcasting Rates Could Spell End
The Future or Fate of Independent Online Radio Rests in Judges' Hands
Official proceedings to determine the new license fees for U.S.-based Webcasters retroactive to January 2006 are drawing to a close. The trial-phase was completed this past November, and deliberations were held on December 21. It is now up to the Copyright Royalty Judges to evaluate the testimony submitted by all parties involved and enact a new statutory rate by March 4, 2007.
SoundExchange has urged that the license fees be raised to 30% of gross revenues or 0.08 to 0.19 cents per-track per-listener, whichever is higher. (This, of course, is in addition to the revenue-based fees already imposed by ASCAP, BMI, and SESAC for use of their repertory of musical works.)
Other participating industry groups -- including such major players as AOL, Yahoo!, NPR, and AccuRadio, and Digitally Imported -- argued that the rates were already excessive given the current marketplace conditions. Any increase would create an unrealistic barrier-to-entry.
At present, eligible online music stations that elect the Small Webcaster Settlement Act pay a license fee corresponding to 10% or 12% of revenues or 7% of operating expenses. In other words, SoundExchange is proposing a triple-fold increase in the statutory rate, and one that would apply to all Webcasters regardless of commercial or non-commercial status.
There is a good likelihood that the revenue-based model now afforded by the SWSA will become obsolete. Individual broadcasters (in particular, those generating less than $50,000 per year) will no longer be provided immunity from the standard performance-based license fees endured by large commercial broadcasters. This could spell disaster for many.
The recording industry contests that stream-ripping alone imposes an unbearable economic risk, and therefore higher royalties are a necessity to compensate sound-recording copyright owners for potential losses in CD and MP3 sales. This ongoing sense of paranoia is particularly evident given that the recording industry perceives Webcasting to have very little to no promotional benefit to performing artists.
Will March 4, 2007 spell the end for independent online radio?
Randall E. Krause
Executive Director
Small Webcaster Community Initiative
info@smallwebcaster.org
