BY DANIEL MCSWAIN
SoundExchange and a number of webcast services have reached a deal to cap the contentious $500 per-channel minimum fee for large webcasters.

The deal, reached today at a private meeting in New York City, will cap the per-channel fee at $50,000 annually. Services party to today's agreement include DiMA-member stations AOL, Yahoo! LaunchCast, Pandora, Live365, MTV, and RealNetworks.

The per-performance rates set by the CRB on March 2 are not affected by the deal.

Among the other stipulations of the deal are:

• An agreement by webcasters to provide full census reporting for all streams (24 hrs/day, 365 days/year) beginning within the next six months.

• Representatives of webcasters and SoundExchange (among them tech experts), will meet at least every six weeks to discuss issues and potential solutions relating to stream-ripping. DiMA-member webcasters also agree to "identify, review, internally test and evaluate technologies to prevent stream-ripping".

According to a statement from SoundExchange, "[while] this agreement applies only to signatory services and only on behalf of SoundExchange members, it is the intention of all parties to present this agreement to the Copyright Royalty Judges and seek its adoption industry-wide."

DiMA Executive Director Jonathan Potter called today's negotiations "an important first step", adding that his group "look[s] forward to the next step of negotiating the royalty rates that will allow for the growth of the Internet radio industry, a platform for music discovery for consumers.”

SoundExchange director John Simson, in a statement released after today's deal was announced, heralded the settlement as a measure of the success of private negotiations between parties.

"With the small webcaster agreement we sent out earlier this week, with progress on the non-commercial webcaster front, and with this agreement, SoundExchange has now addressed the key issues of concern with respect to the CRB rate-setting decision while still protecting the value of sound recordings," Simson said.

DiMA's Jonathan Potter (pictured right) also told RAIN that all parties plan to reconvene soon to continue the negotiations, and that a sense of urgency to resolve the ongoing talks was expressed by both sides.

...

x This is excellent news, primarily because it's the first time in years (as far as I can recall) that SoundExchange and any subset of webcasters have sat down together, discussed the issues, come up with a compromise, and papered the deal! The $500-per-channel minimum was always one of the most egregious parts of the CRB judges' decision — surely they didn't intend that Pandora would be liable for billions of dollars a year as a "minimum fee" — and it's nice to finally get it cleared up. As for streamripping, if it was actually happening, webcasters wouldn't want it any more than record labels do, so this agreement to study the issue together seems like an elegant solution. Now they can hopefully move on to the more substantive issue — a rate that is reasonably affordable in the current (and thru 2010) advertising environment. -- KH x

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From today's New York Post: "Large Internet radio operators and the music industry are expected to head to the negotiating table today in search of harmony on music streaming royalty rates.

"The meeting marks a rare sitdown for the Digital Media Association (DiMA) — a Washington D.C. trade group that counts AOL, Yahoo!, Real Networks and Apple among its members — and its rival Sound Exchange, a collection society that represents the major labels.

"When the two sides meet in New York this morning, the bulk of the negotiation will center on a requirement that Webcasters pay a $500 minimum annual fee for every station they offer...

"Record companies are linking that negotiation to its desire to see Webcasters adopt anti-piracy technology that prevents  listeners from copying online streams, a concept known as 'stream-ripping,' a solution radio operators are resisting...

"The base rate of what Webcasters have to pay won't be in dispute. The Copyright Royalty Board, a panel that decides online and satellite radio rates, ruled that Internet radio companies must pay a scaling rate that starts at 0.0008 cents per song play, retroactively dating back to 2006. The rate will top at 0.0019 cents in 2010 [RAIN coverage here].

Read this entire New York Post article online here.

...

x This is the big meeting that DiMA group members has been trying to schedule with SoundExchange for most of the summer. Although the NY Post article states that the per-channel minimum fee will be the focus, our guess is that the most important issue in the negotiations is the rate itself — both the per-performance rate and whether the parties will agree to the availability of a percentage-of-revenues option. Pandora and other services have argued that they would be forced to shut down their operations if the CRB decision stands, claiming that projected ad revenues through 2010 can not support the CRB's per-performance rate. -- KH and DM x

From the Mercury News' SiliconValley.com: "Some small Internet radio broadcasters are rejecting a new offer from a music industry group to pay discounted royalty rates for streaming music online through 2010...

"Smaller providers said the higher royalties would be too big a financial burden...

"Bill Goldsmith, who operates a small commercial Internet radio station called RadioParadise.com in Paradise, Calif., said Wednesday the proposal is not viable.

"He and five other Webcasters have been in negotiations with SoundExchange the past two months working on the terms of an agreement. Goldsmith characterized what SoundExchange offered as an attempt to 'divide and conquer' the community of smaller Webcasters and reduce his group's clout...

"Rusty Hodge (pictured below), who operates a small Internet radio station called SomaFM in San Francisco, said he also won't take the offer because the revenue and audience criteria are too small 'by any type of radio standards,'...

"Hodge said his station and many others play mostly independent artists,who are not represented by the group and would still be owed royalties at the new higher rates.

"Goldsmith said other smaller stations might be willing to sign anything to get out from under the burden of higher royalty rates...

"In a statement, John Simson, SoundExchange's executive director, said the proposal 'takes the uncertainty out of the air as to most of their programming and lets them continue streaming,'...

"SoundExchange, which said House lawmakers encouraged it to offer the new agreement to small Webcasters, said it is still working on an industrywide resolution to the conflict.

"Richard Ades, a SoundExchange spokesman, said a lot of small Webcasters want to move forward with some kind of agreement.

"'We can't let a few small Webcasters hold up the many,' he said Wednesday."

Read the entire article at SiliconValley.com.

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BY DANIEL MCSWAIN
The American Federation of Television and Radio Artists (AFTRA) is circulating a petition arguing against major record labels' plans to cut benefits and compensation to artists and performers in their union.

AFTRA, which has stood with the RIAA and other recording industry groups in supporting higher performance royalty rates for radio in recent months, is now accusing "the international conglomerates that control the music industry" of attempting to give their artists a raw deal.

Current negotiations on the AFTRA Sound Recordings Code threaten to cut digital distribution payments to background singers, and could also affect a decrease in health benefits to member artists, according to the union.

"In this new age of digital distribution," the group states in an open petition letter to the major labels, "older recordings are finding new popularity... Background singers whose voices are heard on these recordings should share in these new sources of revenue; just like everyone else who contributes to the music you sell."

"A great deal for the big names, not so good for independent artists ..."

An interesting offer this new "small commercial webcaster" deal. If it only covers
artists who have signed with SoundExchange, it will force web casters to stop
playing independent artists.

Once again, a great deal for the big names, but not so good for the small names and independent artists.

"One shudders to think..."

"To me, this is institutionalized payola..."

I do not agree to the terms SX is offering very small webcasters. We play almost
all indie artists, and only a very small percentage have registered with SX.
Therefore, I'd end up having to pay the full CRB rates anyway.

Why does SX want to punish indie artists by effectively shutting down only the stations that play them and keeping stations that play the mainstream artists? Doesn't SX claim to represent the artists? This is arguably worse than shutting down ALL small stations because it promotes artists that don't need promoting.

To me, this is institutionalized payola.