Here We Go Again: Internet Radio Says “No, Really, Screw You” To SoundExchange

Yesterday’s deal between royalty-collection company SoundExchange and small Internet radio broadcasters has been met with scorn from a few prominent Webcasters, who say that a quirk in the deal means that they’ll still have to pay out more money than they can afford:

Smaller providers said the higher royalties would be too big a financial burden. Under the latest SoundExchange offer, qualified Webcasters — those earning $1.25 million or less in annual gross revenue and with a certain size audience — could pay royalty fees of 10 or 12 percent of annual revenue. …

Rusty Hodge, 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.”

Instead, he said SoundExchange should follow the U.S. Small Business Administration’s standard for a small broadcasting company, defined as earning $6 million or less in annual revenue.

SoundExchange’s offer also only covers recordings of its members, which represents more than 20,000 recording artists and 3,500 record labels, including all the major recording companies.

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.

While it’s obvious that the Webcasters shouldn’t make a bad deal just for the sake of making a deal at all, we have to wonder two things (aside from “can’t these people sit down and talk without reporters around?”). First, what independent artists would benefit from the higher royalty rates? Sure, 3,500 labels does sound like a lot in the abstract, but when you factor in CDBaby-distributed labels and the like, that number will probably at least double. Second, how would the “$6 million or less in revenue” figure cited by Hodge break down between radio stations that have both terrestrial and digital broadcast signals? Because if, say, Z100.com can claim that, online, it makes less than $6 million (would you look at all those house ads?) and should therefore be considered a “small broadcaster,” there’s obviously something faulty with the math. Either way, there’s no way this is going to be resolved soon.

Some Internet radio broadcasters reject discounted royalty rate offer [AP via LAT]