Webcasting Royalties Deal?

Online radio stations strike big deal on royalties

The future of Internet radio appears more secure now that a handful of online stations have reached an agreement to head off a potentially crippling increase in copyright royalty rates.

The deal is the product of two years of negotiations between webcasters and copyright holders.

Later: Music Labels Reach Royalty Deal With Online Stations (pdf)

The new agreement treats sites differently depending on their size and business model. It applies to the period from 2006 through 2015 for big sites and through 2014 for small sites. The sites in question often provide customized streams of music, but listeners do not get to directly choose which songs they hear, and they are not permitted to store the music on their computers.

Webcasters with significant advertising revenue, like Pandora or AOL Radio, will pay the greater of 25 percent of revenue or a fee per song, starting at .08 cent for songs streamed in 2006 and increasing to .14 cent in 2015.

Webcasters also agreed to give more detailed information about the songs they play and how many people listen to them to SoundExchange, the nonprofit organization that collects and distributes digital royalties on behalf of artists and labels. They must also retain records of activity on their Web servers for four years.

Small sites with less than $1.25 million in revenue will pay 12 percent to 14 percent of it for the right to stream music.