WASHINGTON: SaveNetRadio, a group representing webcasters has rejected SoundExchange's offer to allow internet radio stations to pay royalty as per old rates until 2010 after which they would have to pay more.
SoundExchange represents the Recording Industry Association of America and collects royalty from webcasters. According to existing legislation, webcasters are obliged to pay a percentage of their public performance revenue as royalty to SoundExchange. However, the federal Copyright Royalty Board had, in March this year, decided to revise the rates which effectively meant webcasters have to pay triple the royalty amount that they currently pay.
The current system – of charging a percentage of revenue was replaced by a per-song, per-listener fee that webcasters would have to pay to SoundExchange.
Webcasters have been critical of SoundExchange's inflexibility about the proposal to increase the royalty rates. Music publishers like recording companies have been lobbying hard for higher royalties from radio stations starting July. Smaller radio stations, those whose annual revenue does not exceed $1.25 million, would be given more time, according to SoundExchange.
The offer to allow smaller radio stations until 2010 is seen as “hollow” according to SaveNetRadio. While SoundExchange insists it is giving an option of “below market” royalty rates, SaveNetRadio fears its impact on webcasters' business. It would “limit their potential growth by accepting the terms of a proposal that would doom them to stay small forever by putting in place revenue caps and [usage caps] that SoundExchange still claims are up for negotiation".
SoundExchange's proposal combines a pay-per-song royalty rate with a revenue cap. It said the caps would ensure they are used only by “those webcasters that Congress believes need the additional financial flexibility to build their businesses.”
Artistes and sound recording copyright owners in the US were earlier not entitled to receive any part of the revenues from the public performance of their works. From 1995, the copyright laws required small radio stations and digital music service providers to pay a percentage of their revenues from public broadcast/performances of copyrighted works.
