Measure to prevent brutal hike in royalty rates

Internet radio operators expressed cautious optimism regarding congressional approval of a deal designed to help them survive a recent steep hike in royalty rates.

“This legislation is not the final answer, but it is an essential step toward a lasting and much-needed solution,” said SaveNetRadio spokesman Jake Ward in a statement Wednesday, referring to Senate approval of the Webcaster Settlement Act of 2008.

Webcasters and SoundExchange, a nonprofit that collects royalty payments from digital radio companies, have been trying to negotiate an agreement since early 2007, when the Copyright Royalty Board increased rates for digital radio by at least 300%. According to SaveNetRadio, numerous webcasters have felt an “immediate and devastating effect,” with three of the most popular operators — AOL Radio, Yahoo Radio and Pandora — having already limited listener access, shut down or announced a likely shuttering if the rates aren’t dramatically lowered.

But since webcasting copyrighted music requires a government license — and with Congress about to recess with no rate agreement reached yet — the Senate approved legislation that would confer congressional acceptance of any agreement webcasters and SoundExchange may hammer out before recess ends.

The House approved the bill, sponsored by Rep. Jay Inslee (D-Wash.), last week. President George Bush is expected to sign it.

Some webcasters were hopeful that the legislation would facilitate an agreement, perhaps sooner rather than later.

Though both sides have reported progress in the ongoing negotiations — public radio has already worked out a deal — SoundExchange was less sanguine about prospects for an agreement with commercial webcasters. “We are hopeful, but we’ve been close at other times during the past 18 months,” said SoundExchange exec director John Simson in a statement.

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