SoundExchange Won’t Enforce Rate Hike?

SoundExchange's executive director says his organization won't enforce a new royalty scheme while it works out a solution with online broadcasters.

Online music broadcasters may have received a temporary stay of execution from an unlikely source: speaking at a roundtable committee meeting held by Massachusetts representative Ed Markey, SoundExchange’s executive director Jim Simson said his organization will not enforce new music royalty rates approved by the Copyright Royalty Board. Instead, the new rates will be postponed indefinitely while SoundExchange works with online broadcasters to work out a solution.

Many online radio sites are facing shutdown as a new royalty scheme approved by the Copyright Royalty Board is due to go into effect July 15. Earlier this week, an appeals court denied webcasters’ reject to delay the new royalty scheme, which essentially triples the amount of money online broadcasters would have to pay to SoundExchange, and imposes the new scheme retroactively to the beginning of 2006. Since the new fee structure was approved last March, small webcasters have cried foul, saying the new scheme will immediately put them out of business.

Details of the new arrangement are still being worked out; among the unknowns is whether SoundExchange would put off enforcement of the new royalty rate only for webcasters which have been takingpart in the CRB hearings, or whether the delay would apply across the market. The parties still have not worked out an agreement on royalty rates which would enable smaller webcasters to keepoperating. With the power to impose the new rates hanging like a hammer over the community, one would think that all the cards would be in SoundExchange’s hands; however, online broadcasters creditlobbying efforts and pressure on SoundExchange from net radio listeners with helping bring SoundExchange to the table.