Internet Radio Plays On, For Now

Sunday's deadline for netcasters to begin paying royalties has come and gone without much fanfare, with many still broadcasting on Monday.

In early May, July 15 was set as the date when Internet radio stations were to pay for 2006 royalties and also agree to a new royalty structure that is much like that of satellite radio. The change was universally opposed by the industry that said it would effectively put the format out of business.

However, it now appears as if Net radio interests and SoundExchange, the royalty body, are back on track this week. Over the weekend, the group signaled a willingness to talk to public radio interests by signing a temporary accord with the Corporation for Public Broadcasting while talks continue there.


The first of these meetings is with the Digital Media Association, who will meet with SoundExchange on Tuesday. Expected to attend are representatives from RealNetworks, Pandora, Yahoo, MTV, AOL, and Live365.

SoundExchange says that it still expects Net radio broadcasters to honor their royalty commitments while talks continue, and has even offered smaller webcasters an option to pay capped royalty fees. So far, it appears as if Net radio operators are still making payments, according to public statements from the group's representatives.

Several issues still remain, most notably the $500 "per channel" administrative payment added to the royalty schedules. Some larger webcasters claimed this could cost them hundreds of millions of dollars in the first year alone.

However, it now appears as if there may be an agreement to cap those fees at $50,000 per company a year.

In any case, agreements still need to be approved before they go into effect. "It should be noted that any offer by SoundExchange is not legally binding until it has been finalized with the groups representing the webcasters involved, approved by the SoundExchange Board, and then ratified by the CRB or through some other form of government action," attorney David Oxenford said in a web log post Saturday.

Oxenford represents several smaller webcasters in negotiation with SoundExchange, including Accuradio, Digitall Imported Radio, and others. Those negotiations are said to be in a more informal stage at the moment.

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