IP P®OSPE©TIVE

This past weekend marked the two-year time limit under the Webcasters Settlement Act given to Internet Radio Services such as Pandora to reach a deal with the recording industry on streaming fees.  The deadline came and went without an agreement.  Traditional broadcasting radio stations, which also stream music on their web sites, did reach a deal with record labels (the terms of which I have yet to uncover).  The beef between the internet radio stations and the record labels is mainly over the per-song fee to be charged to the stations, payable to the record labels.  This per-song fee will increase to .19 cents next year as set by the Copyright Royalty Board. 

Internet radio stations would prefer to pay a percentage of their revenue, rather than per-song fees, unless that per-song fee is remains under .10 cents.  Otherwise, the .19 cents rate will probably put them out of business.  Digital Media Association, who represents the webcasters in the negotiations, and SoundExchange, who collects and disburses digital royalties, will have to ask Congress for an extension on the February 15 deadline. 

It will be interesting to see what the two sides come up with.  A per-song fee is not advantageous to the webcasters or to consumers, because this implicitly limits the incentive to offer more music.  Artists, as a whole, apparently won’t benefit from such a scheme either, for only the top artists will be paid a premium.  A one-time annual license is probably preferable, but the price tag will be heavily disputed.  We will have to keep an eye on the situation as it unfolds in Washington and at the negotiating table.  The balance between copyright owner protection and greater access  to music depends on it!

(For a good article on the issue, see this blog for the New York Times by Claire Cain Miller)