Latest SoundExchange Royalties Offer Suggests Possible Compromise

Perhaps in anticipation of the passage of federal legislation capping the amount of performance royalties collectable from Internet and other digital audio broadcasters at 7.5% of annual revenue, the SoundExchange performance rights organization has reportedly offered one segment of that group - cable radio broadcasters - an annual royalty rate not exceeding that same amount.

Though the news has not yet formally been confirmed by SoundExchange, according to the SaveNetRadio campaign on Monday, cable radio operators were offered a performance royalties rate scale of between 7.25% and 7.5% of annual revenues, which would take effect for each year between 2008 and 2012. SoundExchange had earlier rejected a 7.5% rate when offered as a compromise to the far higher rates it suggested for Internet radio streamers last March.

SoundExchange's move comes as a complete surprise, especially since legislation launched in both houses of Congress last spring has barely made progress, in the face of many other pressing matters including two wars and a near-triple-digit oil price per barrel.

As the Internet Radio Equality Act draft presently reads, "Each provider of digital audio transmissions that otherwise would have been subject to the rates and terms of the determination of the Copyright Royalty Judges made ineffective by section 2 of this Act shall instead pay royalties for each year of the 5-year period beginning on January 1, 2006, at one of the following rates, as selected by the provider for that year: (1) 0.33 cents per hour of sound recordings transmitted to a single listener. (2) 7.5 percent of the revenues received by the provider during that year that are directly related to the provider's digital transmissions of sound recordings."

If SoundExchange is indeed fine with the 7.5% rate, broadcasters are hoping it may also have come to terms with the idea of equal rates across services.

"The Internet radio industry has never asked for more than royalty parity and an opportunity to grow their businesses to the benefit of artists, consumers, and even record labels," SaveNetRadio spokesperson Jake Ward stated Monday. "Perhaps SoundExchange's agreement that cable radio should pay 7.5% of revenue is a precursor to an equivalent offer for Internet radio services. It is hard to imagine that recording industry interests would continue to reject Congressional legislation and webcasters' efforts to set fair royalty rates while simultaneously agreeing to the same standard for cable radio services."