Internet radio sites ink royalty deal

Pandora and other Internet radio Web sites agree to royalty rates; formula combines revenue sharing and song monitoring.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
Edmund DeMarche

How much did you spend out of pocket for health care last year?
  • Under $1,000
  • $1,000 to $5,000
  • $5,000 to $10,000
  • More than $10,000

NEW YORK (CNN) -- After years of tweaking and rewording agreements, commercial Webcasters have agreed to royalty rates for music they stream online, according to a statement from SoundExchange, a not-for-profit organization that collects and distributes digital music royalties.

The terms of the agreement are complex. The formula, which includes revenue sharing and song monitoring, is considered experimental, however "pureplay" Webcasters say the new terms are viable.

"Pureplay" Webcasters include Internet radio Web sites and others who stream music online.

"For this we are truly thankful and want to express our deepest gratitude to everyone involved," Pandora Internet radio founder Tim Westergren wrote on the Pandora blog.

Pandora is one of the largest Internet radio sites with about 30 million registered listeners, according to Westergren.

Under the new terms, "pureplay" Webcasters agree to pay artists and rights owners (through SoundExchange) a minimum percentage of all their U.S. revenues up to 25% and to pay a more significant annual minimum royalty.

The agreement provides for three rate classes, under which Webcasters can choose alternative rate structures.

"Pureplay" Webcasters breathed a collective sigh of relief once the agreement was announced because many feel the new deal will replace an outdated and unfair rates set by a 2007 issued by the Copyright Royalty Board.

"This is an agreement we're proud of because it shows that both sides can address the business concerns of the Webcasters while giving artists and copyright holders the potential to share in the revenue growth of webcasters," said John Simson, executive director of SoundExchange.

Rate classes and fees. Under the new agreement, there will be rate classes: Larger "pureplay" services will pay the top rate, 25% of total revenue.

They must also agree to provide more comprehensive reporting about the sound recordings used than regulations currently require, according to the statement.

Through 2014, small pureplay Webcasters will have the option of paying the greater of a percentage of revenue or a percentage of expenses and in certain circumstances have less stringent play list reporting requirements in return for payment of an additional "proxy fee."

Bundled, syndicated or subscription services will pay per-performance fees that are the same as those contained in an agreement concluded earlier in the year by SoundExchange with the National Association of Broadcasters.

All pureplay Webcasters would pay an annual minimum fee of $25,000 that can then be applied to their royalties owed.

Today's announcement follows agreements concluded earlier in the year by SoundExchange with the National Association of Broadcasters for over-the-air radio stations that stream on the Internet, with the Corporation for Public Broadcasting and with other small commercial Webcasters.

"This is good for music," said Dennis Wharton, the executive vice president of the National Association of Broadcasters. "It sets a rate where artists will receive royalities for the music they produce."

Wharton said although these "pureplay" Webcasts are popular, he doesn't see this decision affecting local radio stations. He said the 235,000,000 people who listen to the radio every day will probably stick with it. "It's hard to beat a free and local option," he said.  To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.