Washington - Web radio broadcasters have been given an unexpected reprieve from new royalty rates many said will put them out of business, when the organization set up by record labels to collect digital royalties said in front of Congress on Thursday that it won't enforce the new rates when they take effect on Sunday.

SoundExchange executive director Jon Simson confirmed for the Radio and Internet Newsletter (RAIN) that SoundExchange won't enforce the new rates, and webcasters may continue operating under existing rates while a new agreement is hammered out.

"For the people who want to comply with the law and are in bona fide negotiations with us, we don't want those people to be intimidated," Simson told RAIN. "And we don't want them to stop streaming."

In addition, SoundExchange has offered to cap the $500-per-channel minimum fee at $50,000 per year for larger webcasters, as long as they "agree to provide more detailed reporting of the music that they play and work to stop users from engaging in 'streamripping'."

The negotiations come after a bipartisan bill (H.R. 3015) was introduced by the House Small Business Committee on Thursday, which if passed would have delayed implementation of the royalty rates by 60 days; a separate bill, called the Internet Radio Equality Act, would completely vacate the new royalty rates, and instead have webcasters pay 7.5% of revenue.

At least one webcaster credited Web radio listeners' calling of their Congressional representatives for the headway made.

"This is a direct result of lobbying pressure, so if anyone thinks their call didn't matter, it did," Pandora founder Time Westergren told Wired News.

At this point, webcasters and SoundExchange will continue new royalty negotiations as Congress looks on, while lawmakers also continue to consider the Internet Radio Equality Act.

Related Links:
http://www.kurthanson.com/archive/news/071307/index.shtml (RAIN)

http://blog.wired.com/music/2007/07/breaking-news-o.html

http://blog.wired.com/music/2007/07/webcasters-worr.html

http://tinyurl.com/2cjxm3 (Billboard)

http://www.digmedia.org

http://www.soundexchange.com