From yesterday's late edition "News Flash" (with revised RAIN Analysis)...


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 While this is excellent news, some press reports are displaying irrational exuberance about the development (see one such account at BusinessWeek Online here). Saying that "webcasters got exactly what they asked for", and calling the agreement "a huge win" is a gross mischaracterization of the months of events leading up to yesterday's deal. Even acknowledging the deal offered to very small webcasters this week, we still have: the rate for large webcasters, the entire deal for Small Commercial Webcasters, the entire deal for broadcasters, and the entire deal for non-comms still to go. And Labor Day (the day Senators wanted to see progress by) is only a week away. It's good that the sides are beginning to make baby steps of progress, but to suggest that we're almost done is ridiculous. Regardless, this is 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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