SoundExchange Offers Cap On Minimum Royalty Fees
June 29, 2007

SoundExchange has proposed a voluntary cap on the minimum fees charged against royalties for sound recordings played on Internet Radio.  The proposal caps advance payments at $2,500 per service.  Regulations due to go into effect on July 15 would require each webcasting service to pay a $500 minimum fee per station or channel regardless of the overall number of stations/channels they are streaming. By making this offer, SoundExchange maintains it "is addressing certain webcasters’ concerns about their liability for per channel minimums."

“There was a lot of misunderstanding out there about how the minimum fee would apply, and frankly some people were wrongly stating SoundExchange’s policy on this matter,” said SoundExchange Executive Director John Simson. “We certainly don’t want anybody to get unduly hurt by the minimum fee, but there is a value to music and a cost to administering the digital royalty program, and we wanted to ensure that everyone was treated fairly – artists, webcasters and record labels.” 

“The idea that the per-channel minimum might have a disproportionate impact on certain Internet Radio stations was never presented to the Copyright Royalty Judges,” added SoundExchange General Counsel Michael Huppe.  “Nonetheless, at the request of Congress, we are trying to work with the small subset of affected webcasters, and are offering this proposal in the hopes of addressing those concerns.”

SoundExchange is also currently in active negotiations with small commercial webcasters and non-commericial webcasters such as public radio and college stations to provide below-market rates under terms similar to those they enjoyed in previous years under the Small Webcaster Settlement Act. 

Between the minimum cap proposal and an effort to accommodate small and non-commercial webcasters, SoundExchange maintains it has "made a good faith effort to address the elements of the recent webcasting ruling that have been of concern to Congress and to individual webcasters."

“I’ve said all along, we are in this together.  We want to see artists and labels fairly paid for the music they provide and we want to see Internet radio grow and flourish,” said Simson.  “There’s no question the new rates set by the Copyright Royalty Judges are fair and are reasonable in the current market.  In proposing these various accommodations to webcasters (especially small and non-commercial webcasters), SoundExchange has taken the initiative to attempt to address the concerns that have been raised by Congress and affected webcasters.”

Simson also noted that, in yesterday’s hearing on webcasting royalty rates before the U.S. House Committee on Small Business, the panel’s ranking Republican, Steve Chabot of Ohio, concurred with Chairwoman Nydia Velazquez, D-N.Y., when she surmised, "I really don't think Congress is the best vehicle to resolve this type of issue.”



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Manny Simon
VP/Adult Formats,
Republic Records

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