SoundExchange, the company which collects royalties from Webcasters and distributes them to artists and record labels, said it would limit fees - at $50,000 a year - for online radio station companies that offer more than 100 channels to customers. This decision comes despite an earlier ruling where a panel of three copyright judges mandated that Webcasters had to pay higher royalty fees and a $500 fee "per station or channel" streamed, regardless of the total number of channels. The ruling meant that large Webcasters, such as Pandora Media Inc. and Time Warner Inc.'s AOL, that stream hundreds of channels faced much higher payments to SoundExchange than in the past.
Although the above two companies admit this is a positive step in the right direction, they maintain the primary issue - royalty rates - still needs to be tackled. "That $500 per channel minimum was kind of absurd and the truth is everybody knew that," Pandora founder Tim Westergren said. "But the real meat of this is the (royalty) rate, which has not been figured out yet." Richard Ades, a SoundExchange spokesman, said it has been negotiating with several Webcasters for the past month and that the group hopes the new agreement will be adopted industrywide.