Music Industry Offers Discounted Royalty Rate

Yesterday, a music industry group said small Internet radio broadcasters could pay discounted royalty rates for streaming music online through 2010, a move that could keep the struggling businesses alive. Webcasters who earn $1.25 million or less in annual revenue would have until Sept. 14 to accept SoundExchange's offer and pay royalty fees of 10 or 12 percent of annual revenue. This move is the latest in the internet radio saga which started May of this year, when a panel of three copyright judges ruled on higher royalty rates for internet radio broadcasters after the music industry and Webcasters were unable to agree on a royalty system to replace a previous set of agreements that expired Dec. 31, 2005.

The revised rates sparked much controversy, with some claiming it would be the death of internet radio. However, just as the rates were about to take effect on July 15th, SoundExchange, the music industry group that collects royalties from these small stations and distributes them to artists and record labels, offered a reprieve, allowing time for further negotiations and keeping rates the same.

No settlement has been agreed to as of yet, and webcasters are still unhappy with the newly offered deal. Bill Goldsmith, who operates a small commercial Internet radio station called RadioParadise.com in Paradise, Calif., said Wednesday that the proposal is not viable. He and five other Webcasters have been in negotiations with SoundExchange the past two months working on the terms of an agreement. Goldsmith characterized what SoundExchange offered as an attempt to "divide and conquer" the community of smaller Webcasters and reduce his group's clout. "This would be a huge step backward for us," Goldsmith said.

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