Internet Radio Gets Semi-Saved

noah | February 18, 2009 10:30 am

A scan of the headlines today reveals a lot of contradictory front-lines on the subject of online radio: “Agreement reached on Internet music royalty rates,” “No Deal Reached For DIMA, SoundExchange,” “Deal Reached To Save Internet Radio-Except For Pandora.” It’s so confusing! That’s because there were actually multiple royalty-payment deals reached between various lobbying branches for Internet radio and SoundExchange, the company that collects about 95% of sound-recording royalties. What this means for you and your favorite source of online streaming music, after the jump.

Commercial radio stations that also stream online are safe. Thanks to a deal struck on Monday, big-radio behemoths like Clear Channel and CBS Radio will now pay $1.50 for every song heard by a thousand listeners in 2009; that amount is set to rise to $2.50 per 1,000 listeners in 2015, although one can assume that there’ll be some sort of wrangling over that rate in the next six years, especially if the advertising business continues to crater.

Many online-only stations’ fate is less certain. The Digital Media Association (DiMA) and SoundExchange didn’t come to a compromise on royalty rates for broadcasters like Rhapsody and Pandora by Sunday, which was the deadline set by last year’s Webcaster Settlement Act. The streaming-media companies are still free to negotiate on their own or as a group with SoundExchange, but this may result in the companies being on the hook to pay the full copyright rate—the same one that the companies have been saying would put them out of business because of its crazy markup from previous rates.

But a few tiny stations will be OK—for now. A few small Webcasters—defined as such based on revenue, operating expenses, and “aggregate tuning hours” (basically, the amount of time that’s streamed to all listeners in the U.S.) yearly—agreed to a deal that will allow them to pay smaller set fees to SoundExchange. If the site in question goes over one of the three caps, it’s automatically considered a larger station, and is in the above pool; some sites, like SomaFM, are objecting to the cap on aggregate tuning hours, saying that even though they don’t make (or spend) a lot of money, they’re being punished for their popularity. And others are still wrangling with lawyers!

So what does this mean for you? Well, if you listen to a Clear Channel outpost online, you’re probably safe. (Yay, big companies win again!) Pandora and RealNetworks have been flouncing around threatening to pull the plug, or clamp down on their service options, should these rates hold—but since an appeal of the Copyright Royalty Board decision that led to these royalty rates being decided is set for next month, listeners for those services are probably safe for now.

Agreement reached on Internet royalty rates [AP]No Deal Reached Between DiMA, SoundExchange [Billboard]