SoundExchange Offers Cap On Minimum Royalty Fees
SoundExchange announced that it proposed a voluntary cap on the minimum fees charged against royalties for sound recordings played on Internet Radio. SoundExchange proposed capping such advance payments at $2,500 per service. Recently enacted regulations (due to go into effect on July 15) 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 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 John Simson, executive director of SoundExchange. "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."
SoundExchange has reached out to the Digital Media Association this week to discuss the proposal, including the most effective means for implementing this relief as broadly as permitted under the law. "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," said Michael Huppe, general counsel of SoundExchange. "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. Together with this minimum cap proposal and its effort to accommodate small and non-commercial webcasters, the recording artists, independent record labels and large record companies that comprise SoundExchange have 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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