BY DANIEL MCSWAIN
A settlement offer that would allow noncommercial webcasters to continue operating under the terms of the 2002 SWSA has been extended by SoundExchange at the apparent behest of a letter from members of a key Congressional subcommittee [previous RAIN coverage here and here].

According to a letter from SoundExchange and RIAA general counsel Michael Huppe, SoundExchange "proposes to extend, by private agreement, the key components of the rates and terms adopted for noncommercial webcasters pursuant  to the SWSA, with a few minor modifications, for the current license period."

The offer to noncomms was acquired by RAIN with the help of Intercollegiate Broadcasting System chief Fritz Kass [pictured left].

The exact noncomm terms of the SWSA have been detailed previously by Joel R. Willer, Asst. Professor of Mass Communications at the University of Lousiana at Monroe. A table of those rates and terms is below:

The SoundExchange letter stresses the necessary compliance of  noncommercial webcaster to reporting requirments. Along those lines, the letter notes that one of the "minor modifications" to the SWSA terms "also include a provision requiring that services submit statements of account on a monthly basis whether they owe usage fees or not. Services would alas no longer be permitted to pay a $25 monthly fee in lieu of reporting."

A copy of the noncomm offer letter is available here.

...

x As we mentioned last week regarding the SoundExchange offer to negotiate an extension of the SWSA terms with smaller commercial webcasters, the Berman/Coble letter is rife with language that appears to be right out of the SoundExchange handbook. One popular theory among webcasters is that SoundExchange is making offers to small webcasters and noncommercial webcasters in hopes of slowing down the momentum in the U.S. Congress in support of the Internet Radio Equality Act. -- DM x x

From Time: "Radio's got a problem. Although some 200 million people tune in each week to hear their favoriteovercaffeinated DJ or catch those crucial rush-hour traffic updates, it's getting tougher to hold listeners' attention. Facing flat revenues and competition ranging from iPods to music phones, the 87-year-old industry is scrambling to reinvent itself.

"But not even satellite radio or the new HD format addresses this analog medium's fundamental flaw: it doesn't give people any say in which songs they hear...

"On websites such as Last.fm, Pandora.com and the new Slacker.com personalized radio lets you train it to understand your tastes. You can, of course, just listen to the music passively as it plays on your computer. But it's even better when you make it your own, by marking each song as a favorite, skipping past it or banishing it from the station's playlist altogether...

How the services work
"Each customizable radio service has its own way of assessing what you like. Pandora refers to its database of more than 600,000 major-label songs -- all of which have been categorized by musical attributes such as voice, tonality and chromatic harmony --then serves up similar-sounding tracks...

"Slacker, which launched in March, uses professional DJs to dream up constantly changing playlists that give you more variety while still adhering to your basic tastes...

"And Last.fm, which is based in London, taps into the collective wisdom of its 20 million users worldwide. For example, if you like Beyoncé, and other Last.fm members who like Beyoncé also listen to Mary J. Blige, then the service will put Mary on your playlist as well...

Portability is key
"Although its revenues are minuscule compared with the $21 billion of the terrestrial-radio industry, more than 4 million people in the U.S. visit Pandora and Last.fm each month, according to comScore Media Metrix. That makes them the fifth and sixth most popular Web radio stations in the country...

"Making personalized radio portable could be the key to its long-term success... In addition to Sprint's move to put Pandora on phones [photo at right; RAIN coverage here], SanDisk recently demonstrated a prototype portable player that could run Pandora, and Slacker plans to sell a $150 iPod-like player this summer that can get wireless music downloads from its website.

Businesses built on ad sales
"Unlike iTunes, music from Slacker is free. 'Most people don't want to pay for radio,' says (Slacker CEO Dennis) Mudd, who hopes to bring in revenue through audio advertising spots. That model is showing some promise...

"About half of (Internet radio's ad revenue last year) came from online ads on websites owned by conventional radio broadcasters like CBS Radio and Clear Channel. 'Internet radio, when you tie it in with our business model, I think it works,' says Clear Channel CEO Mark Mays, who is beefing up his stations' Web presence with online videos and promotions...

"Elvis Duran, who hosts a popular morning show on New York City's Z100, says he could imagine a future in which listeners wake up to some comedy and conversation from the show followed by three songs tailored to their tastes. But he doesn't expect live DJs to become obsolete: 'When people wake up in the morning, it's good to hear some people who are talking about interesting topics and who let you know, hey, the world's still spinning and I can go out there.'"

This entire article is available on Time's website here.

From a San Jose Mercury News editorial: "For Internet radio, July 15 will be the day the music dies.

"That's when exorbitant new royalty rates, retroactive to 2006, are supposed to kick in. The fees to artists and labels are so high they will wipe out many Web radio broadcasters, including industry leaders like Live365 in Foster City and Pandora in Oakland...

"Keeping Internet radio solvent is vital to preserving a diversity of listening choices and giving exposure to new musicians. About 72 million people tune in to Net radio to hear everything from Bollywood show tunes to Celtic Christian classics.

"The U.S. Court of Appeals must grant the industry a stay of execution [coverage in yesterday's RAIN here] to allow Web radio companies more time to negotiate a deal with the music industry.

"If they can't come to an agreement on their own, Congress must step in and set fair rates. Bills in the House and Senate, co-sponsored by local lawmakers like Reps. Anna Eshoo, D-Palo Alto, and Mike Honda, D-Campbell, are already pending [see RAIN here and here]...

In March, the obscure Copyright Royalty Board ruled that Web stations should pay fees to performers and music labels based on how many listeners hear each song. The new system would raise the fees as much as 1,200%, bankrupting many Web broadcasters...

"The federal legislation would set royalties at about 7.5% of revenue -- about the same rate that satellite radio broadcasters Sirius and XM Radio pay for broadcast rights.

"Performers and music labels deserve compensation for their work. One solution Congress should consider is reducing Internet royalties but imposing a tiny, new royalty on over-the-air broadcasters. Asking traditional broadcasters to pay their fair share could also allow the music industry to lower royalties on XM and Sirius, which are losing so much money under the current system that they want to merge.

"No matter what, lawmakers can't let the sounds of Internet radio fade away into the ether."

Read this San Jose Mercury News editorial online here.

From AHN: "Wednesday's $280 million acquisition of Last.fm was just CBS' latest effort to gain a hold on Internet radio. In June, TargetSpot, funded by CBS Radio, will launch location-aware radio ads.

"CBS plans to use the technology on its more than 100 Internet radio stations. TargetSpot allows advertisers to customize online ads, pinpointing specific demographics and locations.

"TargetSpot is just one of the companies hoping to profit from the growth in Internet radio. After CBS invested an undisclosed amount in April, the radio network bought part of the company [see RAIN coverage here].

"Following the streaming radio advertising launch, TargetSpot expects to tackle streaming video later this year."

Read this entire item from AHN online here.