SoundExchange, Pureplay Webcasters Reach Royalty Deal

Authored by Mark Hefflinger on July 7, 2009 - 9:37am.

Washington - SoundExchange, the firm set up by the major record labels to collect and distribute digital royalties, announced on Monday that it has agreed on new streaming music royalties for "pureplay" commercial webcasters. The "experimental rate agreement" includes revenue sharing for most services, as well as more robust reporting requirements, in exchange for a discount on per stream rates.

Under the deal, which is retroactive to 2006 and lasts through at least 2014, pureplay webcasters who agree to the new terns will pay rights owners a minimum of up to 25% of all of their U.S. revenues, and will pay a higher annual minimum royalty of $25,000 -- which may be applied to royalties owed.

Three rate classes have been created, consisting of small pureplay webcasters, who earn less than $1.25 million annually -- with a cap on music streamed; large pureplay webcasters; and pureplay webcasters that provide bundled, syndicated or subscription services.

SoundExchange referred to the deal as an "experiment," adding that it "does not consider these terms indicative of fair market rates."

"Time will tell if revenue sharing is the right move for both the recording community and webcasters, but we're willing to take the risk in the hope that artists, rights holders and webcasters can all benefit," said SoundExchange executive director John Simson.

"We are pleased that today's royalty agreement between SoundExchange and pureplay webcasters will provide some relief from the crushing royalties that were imposed by the Copyright Royalty Board," said Jonathan Potter, executive director of the Digital Media Association, which represents larger webcasters.

"For many years one of DiMA's top priorities has been to level the competitive playing field for Internet radio companies as compared to competing radio services, and today's agreement is a step in that direction."

Related Links:
http://www.soundexchangeblog.com/?p=91

http://snipurl.com/mbc91 (PDF: DiMA statement)