Washington - SoundExchange, the music industry entity that collects and distributes digital royalties, announced yesterday that 24 small webcasters have signed an agreement that would extend the "below-market" music royalty rates they have received since 1998 through the year 2010.

The agreement essentially extends the term of the Small Webcaster Settlement Act, which covers webcasters earning less than $1.25 million in annual revenues.

"Giving small webcasters more time to build their businesses with below-market rates is something Members of Congress wanted us to get done, and we have," said SoundExchange head John Simson.

"It's a sacrifice our members are willing to make at the request of Members of Congress and in order to give the smallest webcasters below-market rates for an additional limited time."

While just 24 of the hundreds of small webcasting businesses signed the deal, SoundExchange said that others are in the process of signing, adding that some opted not to sign "because their business models benefit more from the regular commercial rates," while others "operate via webcast aggregators who handle payments on their behalf."

At least one group of webcasters said it rejected the deal because it would force them to remain very small businesses.

"You'll be left with an industry with essentially hobbyists and big companies that subsidize their webcasting with other lines of business -- essentially crushing the hopes of those who saw the Internet as a way to build an independent radio business," David Oxenford, an attorney for a group of small webcasters including Accuradio, Radio Paradise and Radioio, told CNET News.com.

SoundExchange is still negotiating royalty rates with larger commercial webcasters, like Yahoo, Live365 and Pandora.

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